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Planning Commission too bats for staggered hike in energy prices

31 Dec 2012 Evaluate

After Prime Minister, the deputy chief of the Planning Commission Montek Singh Ahluwalia too has advocated phased increase in energy prices and has said that failure to do so would push up fiscal deficit, which is too high.

Ahluwalia said that the consequences of not raising the prices of petroleum goods would be rise in subsidy bill, more burdens on the budget, lesser resources for social sector schemes and deterioration in health of oil companies. Though he accepted that Petrol is price appropriately and said that it’s even taxed beyond what pure international pricing would suggest and that is also reasonable. But diesel is underpriced and LPG is hugely underpriced.

He further stated that under-recoveries on the petroleum companies are at an unsustainable level  and the total under recovery on petroleum products is about Rs 160 thousand crore even after the recent diesel price hike some of it will go as a burden on the budget.

Earlier, Prime Minister Manmohan Singh at the National Development Council (NDC) hinted at tough decisions such as raising energy prices and cut in subsidies to achieve the 8 per cent growth target in the 12th Five-Year Plan.

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