The stage is set for a hike in retail prices of petrol and diesel in the next couple of days. The Prime Minister, Dr Manmohan Singh, today took stock of the grave oil situation at a high-level meeting to work out a package to bail out state-run oil firms which have been tottering in the face of spiraling global crude oil prices.
At the brain-storming session, Dr Singh held detailed deliberations with the external affairs minister, Mr Pranab Mukherjee, finance minister, Mr P Chidambaram, petroleum minister, Mr Murli Deora and Planning Commission deputy chairman, Mr Montek Singh Ahluwalia, to weigh pros and cons of this package that is likely to be a blend of various measures including fuel hike, a rejig in import and excise duties on petroleum products and issue of government bonds to compensate the staggering revenue losses of public sector oil marketing companies (OMCs). We discussed the various options ... Hopefully, by tomorrow or by day after tomorrow, we will have a solution, Mr Deora said after the 75-minute long meeting.
The proposed package is to be put before the Union Cabinet for its approval. The Cabinet was scheduled to meet this evening, but it was deferred, possibly till tomorrow or Saturday, indicating that the bailout formula was yet to get political clearance from the highest authorities that would only be possible after the PM consults the Congress president, Mrs Sonia Gandhi.
It is going to be a really tough political call for the Congress high command, given the adverse impact any fuel hike could have on inflation which has already snowballed into a hyper-sensitive political issue in this election year.
The Congresss key allies, the Left, have already called a fuel hike an unacceptable proposition, citing the existing runaway prices of essential commodities. Congress circles, however, make it clear that biting the bullet has now become unavoidable for the government.
Official sources said the final package would only reflect a lower hike than what the petroleum ministry has demanded ~ a hike of Rs 10 a litre in petrol, Rs 5 per litre in diesel and Rs 50 per LPG cylinder ~ coupled with a cut in customs and excise duties on petroleum products as well as bonds for retailer firms.
International prices touching 135 dollars a barrel has forced down our throat Rs 225,000 crore revenue loss. Unless we act, companies will not be left with cash to import crude, Mr Deora said. The PM and FM saw papers (of projected revenue loss and options thereof). They realise very much that we need to help (PSU oil firms) on a war-footing, he said.