No cut in oil prices: Govt

First supplementary demand for grants gets Lok Sabha nod. The Lok Sabha today approved the central government’s first supplementary demand for grants, involving additional cash outgo of around Rs 1,05,614 crore, to meet extra liabilities arising in the ongoing fiscal year.

The outgo is primarily for implementation of the Sixth Pay Commission award, farm debt waiver and relief scheme, enhanced allocation towards rural employment schemes, fertiliser subsidies and oil bonds.

At the same time, Finance Minister Mr. P Chidambaram, in his reply to the debate on demand for grants today, ruled out any immediate cut in petroleum prices. “Our administered prices of petrol, diesel, LPG and kerosene are based on the Indian basket. Reduction in crude oil prices has helped but not to the point where we can roll back the prices,” he said.

But Mr. Chidambaram also hinted that when price comes down to $67 a barrel, the government could review the oil prices. “Even at $71 or $72 a barrel, there is an element of subsidy. There is under-recovery. Under-recovery has come down, but we are not making any profit. We sincerely feel that the prices will come down. When that happens, the government will, at appropriate time, take an appropriate decision,” he said.

The UPA government also ruled out any further relaxation in the debt waiver scheme for farmers. According to the finance minister, the scheme has already been modified and “it is not possible at this stage to change it further”.

He also said the government was building strategic reserves of foodgrains, even as Agriculture Minister Mr. Sharad Pawar gave the details about the bumper harvest of rice and wheat and countered allegations that some states were not receiving adequate supply of foodgrains.

Mr. Chidambaram also laid importance on stimulating the economy while controlling inflation, currently at 11.44 per cent. He hailed the RBI move to cut the repo rate and mandatory deposit requirements of banks (cash reserve ratio). “I can see inflation is still high, but the benefits of decline in crude oil and commodity prices will bear fruit in weeks and months to come,” he said.