The government continues to do a flip-flop on the oil sector deregulation even as global crude prices have softened somewhat from the recent peak of over $70 per barrel. State minister for petroleum and natural gas Jitin Prasada told Parliament on Monday that the government was not actively considering any proposal to free the retail prices of fuels.
The minister told the lawmakers that the government was monitoring the situation closely and would take an appropriate decision on regarding the pricing keeping the interests of poor in mind.
The government determines the retail petrol and diesel prices along with the cooking gas and kerosene. The Economic Survey presented before the budget has advocated that the pricing of at least petrol and diesel should be left to the markets. The same idea was repeated by the government when it said in the budget that it would form a committee to look into the deregulation issue.
However, there has been little progress on the issue and it seems difficult at this stage that the government will like to take the unpopular route of freeing pump prices of retail fuels. This however reflects badly on the balance sheets of public sector oil marketing companies which are projected to suffer revenue loss of around Rs 49,270 crore for selling fuels below market prices. Although the government compensates the companies in part, the end result remains suboptimal for both the companies as well as government finances.