For this, the current high fiscal deficit must be contained and, hence, the hike in the prices of diesel and cap on liquefied petroleum gas (LPG) cylinders became essential. The subsidy on petroleum products, we are told, was “ Rs. 1,40,000 crore last year”. If the prices were not increased, then this would “have been over Rs. 2 lakh crore. Where would the money for this have come from? Money does not grow on trees”.
How has this subsidy figure been arrived at? This is much higher than the budget estimates. This seems to be calculated on the basis of the ‘under recovery’ of the oil companies. What is this? It is the difference between the retail price of petroleum products and its import price. It is, hence, notional in nature because import prices include duties, insurance, freight and other levies. These are not paid by the Indian companies since what we import is crude oil, which is processed in India to produce petrol, diesel, kerosene, etc. Instead of linking the price to the cost of imported crude plus domestic refining cost, the international price is taken as the benchmark. This is the gigantic fraud.
This fraud is reflected in the fact that all the oil companies are reporting handsome profits, not losses. Oil and Natural Gas Corporation (ONGC) Limited declared a net profit of Rs. 25,123 crore for the year 2011-12. For the following quarter ending June 30, 2012, it has reported a further growth of 48.4%. Indian Oil Corporation (IOC) has reported a net profit of Rs. 4,265.27 crore. Hindustan Petroleum Corporation Ltd (HPCL) reported a net profit of Rs. 911 crore. For the last quarter, January-March 2012, this further increased by 312%. Bharat Petroleum has reported a net profit of Rs. 1,546.68 crore.
Further, parliamentary answers and proceedings show that from 2010 onwards, the central exchequer has been earning anything above Rs. 1,30,000 crore annually through taxes and duties on petroleum products. After accounting for all subsidies, the Centre was still left with a surplus of over Rs. 90,000 crore in 2010-11. Who is subsidising whom, Mr prime minister?
Interesting throughout. Take a look!