Fixing petroleum subsidy issue is key: Survey

Updated - December 04, 2021 11:17 pm IST

Published - February 27, 2013 07:02 pm IST - NEW DELHI

CHENNAI:16/09/2012:  Petrol dispensing pump at a Petrol Bunk in Anna Salai. Photo: K_Pichumani

CHENNAI:16/09/2012: Petrol dispensing pump at a Petrol Bunk in Anna Salai. Photo: K_Pichumani

The Economic Survey has called for addressing the key issues of petroleum subsidies, clarity on gas pricing policy, petroleum price distortion and concerns over various disputes pertaining to the New Exploration Licensing Policy (NELP).

“Addressing the key fiscal risk of petroleum subsidies is critical in better fiscal marksmanship,” the Survey said. The overall subsidy bill of the government, it said, was likely to overshoot the target of Rs.1.79 lakh crore this financial year due to higher crude oil prices. The government had put the petroleum products subsidy at Rs.43,580 crore, food subsidy at Rs.75,000 crore and fertiliser subsidy at Rs.60,974 crore, taking the total subsidy bill to Rs.1,79,554 crore for 2012-13. “With recent reforms in diesel prices and efforts at expenditure re-prioritisation, the medium-term fiscal consolidation plan is credible, and could yet again yield macro-economic dividends in terms of higher growth and price stability,” the survey said.

“The short-run action needed to remove impediments to implementation of projects in infrastructure, especially in the area of energy, includes clarity in terms of NELP. The long-term strategy should focus on issues like petroleum price distortion and natural gas pricing. The government appreciates the economic role of rational energy pricing. Rational energy prices provide the right signals to both the producers and consumers and lead to a demand-supply match, providing incentives for reducing consumption on one hand and stimulating production on the other,’’ it stated.

Over the years, India’s energy prices had become misaligned and were now much lower than global prices for many products, it said. The extent of misalignment was substantial, leading to large untargeted subsidies, it added. The high level of global crude oil prices also had a bearing on fertiliser subsidy as there was inadequate pass through in urea prices, it said. Food subsidy had been growing at an average annual rate of 25.4 per cent in the last five years, and the bulk of it was accounted for by the targeted public distribution system (TPDS), it pointed out.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.