The Central Government on Friday sought Parliament's approval for Rs.30,000-crore fuel subsidy payout to state-run oil marketing companies (OMCs) during the first-half of the current fiscal.
Finance Minister Pranab Mukherjee presented in Parliament second supplementary demands for grants of Rs.56,848.46 crore, more than half of which was for compensating OMCs for selling diesel, domestic LPG and kerosene at subsidised prices.
Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) have incurred losses of Rs.64,900 crore in revenue on selling diesel, domestic LPG and kerosene below cost in April-September.
Of this, the government will make good less than half of it through cash subsidy after Parliament approves the supplementary demands for grants.
Upstream oil firms such as Oil and Natural Gas Corporation (ONGC) have already paid Rs.21,633 crore to make up for one-third of the revenue loss. The balance Rs.13,267 crore would have to be absorbed by the three fuel retailers.
The government has this year not given any subsidy to the OMCs. It had only made a promise of Rs.30,000-crore payout for the first-half. The delay in the release of the subsidy led to the three retailers posting huge net losses.
The government had in 2010-11 paid a cash subsidy of Rs.41,000 crore to the three retailers to make up for more than half of the Rs.78,190 crore revenue loss on fuel sales in the fiscal. In that year, ONGC and other upstream firms had given out a dole of Rs.30,297 crore.
This fiscal, IOC, BPCL and HPCL are projected to lose a record Rs.130,000 crore on selling diesel, domestic LPG and kerosene below cost. The government would have to provide Rs.65,000-70,000 crore in subsidy in the full year if it continues to provide subsidy at levels it has been doing so in the past.
The government had paid an all-time high subsidy of Rs.71,292 crore in 2008-09.
Pranab Mukherjee presents second supplementary demands for grants of Rs.56,848.46 cr