No immediate plans to hike fuel prices: Jaipal Reddy

Rubbishing the reports about oil price hike in the near term, Oil Minister S Jaipal Reddy said that, ‘there is no immediate plan to raise domestic fuel prices.’ Throwing the ball in Cabinet’s court, Oil Minister further added that it was now up to the cabinet to decide on the onerous issue of reducing hefty subsidies on diesel, cooking gas and kerosene.

Both oil and finance ministries have been pitching hard for a rise in fuel prices, since their subsidies are drag on India's fiscal deficit at a time of slowing growth. India is targeting a fiscal deficit of 5.1 per cent of GDP for this fiscal year. But a higher subsidy bill and lower tax revenue have resulted in its fiscal projections for 2011-12 go awry. The fiscal deficit of the country was 5.8 per cent in 2011-12, wider than the initial target of 4.6 per cent.

Taking a U-turn from his ministry’s earlier stance, Jaipal Reddy said that floating a cabinet note is different from taking action and no decision has been taken yet on fuel prices. With oil firms losing a record Rs 560 crore per day on sale of regulated diesel and cooking fuels and another Rs 16 a day on petrol, the Oil Ministry recently moved a note for the consideration of the Cabinet Committee on Political Affairs (CCPA) explaining the wobbly situation surrounding the oil sector.

Meanwhile, besides hike in diesel, cooking gas and kerosene prices, the Oil Ministry is also seeking to limit supply of subsidized LPG cylinders to 4-6 per household in a year. However, what government does as measure to avert a fiscal disaster and a sovereign credit downgrade to junk by global rating agencies remain a factor to watch for.