Dont talk,do

PM has spoken again of rationalising prices of fuel products. Govt must now pick up the gauntlet

Listen to this article

Dont talk,do

00:00

1x 1.5x 1.8x

PM has spoken again of rationalising prices of fuel products. Govt must now pick up the gauntlet

In Bathinda last week,Prime Minister Manmohan Singh emphasised the need to rationalise prices of fuel products. Simultaneously,he underlined that the poor and needy must be shielded from its effects. Over the last four months,the government has explained the economic rationale for a fuel price hike on different occasions. On New Years eve,Singh had warned of the imperative of pruning subsidies on fuel and fertilisers. Between January and April end,global crude oil price has fluctuated between less than 110 a barrel to almost 130 a barrel. Currently,it is around 120 a barrel. The last time prices were revised in India was in December 2011. In fact,oil market companies had cut petrol prices by 65 paise a litre. This was over and above the Rs 1.85 per litre reduction in November 2011. Both cuts were made because of a drop in the global crude prices. But since then,OMCs have been silent,largely because of the governments veiled objections.

Last week,the cabinet mustered the courage to clear the Banking Bill. But Finance Minister Pranab Mukherjee settled for a watered down bill as recommended by the parliamentary standing committee. Originally,the ministry provided for allowing investors voting rights capped at 10 per cent now commensurate with their shareholding. In deference to the House panels recommendations,however,the ministry agreed to cap the voting rights at 26 per cent for private sector banks. The point is,Mukherjee heard out the Opposition and the allies. In the case of fuel products,too,the government will not find it politically easy to do away with subsidies on diesel. That can be done in phases. But why hold back oil PSUs from hiking petrol prices by Rs 8 a litre,the quantum of hike required based on the current global crude oil prices? Diesel requires an increase of Rs 15 a litre,kerosene Rs 32 a litre and cooking gas Rs 550 a cylinder.

It is for the prime minister,and the Congress leadership,to push the envelope on issues that are urgent and in the larger national interest. Poor targeting of subsidies,the rising fiscal deficit and sluggish growth will hardly bring this government any electoral dividend. Singh must pick up the gauntlet by raising fuel product prices,at least in a modest way,now. There cant be a more appropriate place than Parliament to announce such a step and explain its necessity.