As per Finance Minister P Chidambaram, the government will not factor the impact of diesel price hike by oil companies, while computing the oil subsidy bill for the current financial year. Replying to a question on how the decision of diesel price hike would impact the oil subsidy bill, Chidambaram said, ‘I am not factoring that (impact of price hike on oil subsidy) at the moment. I am proceeding with the basis that the subsidy bill remains the same. When and how they (oil companies) will make small corrections, I can't say.’
Concerned over under-recoveries by oil companies, the Cabinet Committee on Political Affairs (CCPA) on Jan 17 allowed the oil companies to increase the diesel prices by a ‘small quantum’ periodically. The Cabinet also approved the decision to raise cap on subsidized LPG cylinders from six to nine, effective from April, 2013.
Further, in December, the government obtained Parliament approval for raising the oil subsidy bill by Rs 28,500 crore over and above the amount earmarked in the Budget for 2012-13. With the additional allocation, the total oil subsidy bill in the current fiscal will soar to Rs 72,260 crore.
The government’s bold decisions is expected to improve the bottom line of the oil marketing companies and at the same time will helpful to contain the oil subsidy bill of the government.
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