Supreme Court finds need to be pragmatic on subsidies

The Supreme Court on Monday cleared the decks for the Centre for not providing subsidised diesel to bulk consumers of public utility services such as Railways and State transport corporations, saying the economy is in bad shape and pragmatic approach is needed on subsidies.

The apex court said that stereotype thinking on subsidy has to be changed as economy, which has been hit by falling value of rupee, has to survive and public transport corporations have to find out means to sustain themselves without getting subsidy.

‘‘You (transport corporations) just cannot sustain on subsidy. You have to find ways and means to sustain. You have to charge from the public. We cannot ignore the fact that oil is imported. Stereotype thinking has to be changed. How can you continue to survive on subsidy,’’ a Bench headed by Justice R.M. Lodha said.

The Bench, also comprising Justice Madan B. Lokur, set aside the stay orders on the implementation of the Centre’s policy on deregulation of diesel prices passed by the Madras and Kerala High Courts. The Bench took into consideration the fact that 83 per cent of oil is imported and any subsidy on its price would hit public sector oil companies. It also suggested that the transport corporations devise means to cut the cost of their operations and charge the public in order to recover from the burden of increased fuel bill.

‘‘A very balanced approach has to be taken. Economy is not in good shape and ultimately it has to survive,’’ the Bench said, adding, ‘‘We have to take note of the fact that oil is imported and value of rupee is going down and it is impacting the current account deficit of the government.’’

In January this year, the government had decided to charge bulk consumers such as State transport corporations, Railways, and defence the market price of diesel, which is costlier by Rs.14.50 per litre than what is available at petrol pumps.

The court passed the order on an Indian Oil Corporation petition challenging the order of the High Courts. Earlier, it had stayed all proceedings in various High Courts against moves to decontrol diesel. The oil companies pleaded that it is a policy decision of the Centre and Railways too have to abide by it.

‘‘The primary objective behind the pricing reforms... is the growing imperative for fiscal consolidation, the need for reducing the subsidy burden on petroleum products so as to allocate more funds to social sector schemes for the common man and for ensuring the country’s energy security in the long term,’’ the petition had said.

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