This is an interesting piece of statistic to tell the defenders of diesel subsidisation. Across India,huge percentage of power companies which use furnace oil to produce electricity have shifted to subsidised diesel to run their plants. Even after Thursdays revision,at Rs 47 per litre (Delhi price) will be Rs 11.35 cheaper than the price of furnace oil at Rs 58.35. The price difference is a measure of the distance that diesel prices still have to travel to eliminate the awesome distortions that have crept into the economy as a result of the subsidised oil economy. This is a scale of subsidisation that has taken the economy way beyond the usual arguments of diesel versus petrol driven cars in deciding on how far diesel should be subsidised.
The decision of the Cabinet Committee on Political Affairs to present a new oil bill to the economy has to be read accordingly as the first in a long series of painful adjustments. The markets and industry are pleased but only because they too see it as the first among a series of such measures. The household managers too know this and so do the political parties which too have reacted on expected lines. The rise in the price of diesel by Rs 5 per litre and a cap on the number of subsidised cylinders of cooking gas to six in a year will only shave off Rs 20,300 crore from the under recovery of public sector oil marketing companies still leaving an uncovered gap of Rs 1,67,000 crore for them in 2012-13.
subhomoy.bhattacharjee@expressindia.com
