Government owned Oil Marketing Companies (OMCs) raised the price of petrol by Rs 6.28 per litre on May 23, 2012. After the inclusion of local taxes, this price hike amounts to an increase of Rs 7.54 per litre in Delhi. India met 76 per cent of its total petroleum requirement in 2011-12 through imports. Petrol prices have officially been decontrolled since June 2010. However, it has been argued by experts that prices of petroleum products have not been increased sufficiently in order to pass on cost increases to consumers. The inability to pass on international crude prices to consumers has affected OMCs more in recent months due to the depreciating rupee, which has further increased their losses. The total under recoveries faced by OMCs for diesel, PDS kerosene and domestic LPG for 2011-12 stands at Rs 138,541 crore. It was recently announced that the OMCs will receive Rs 38,500 crore from the Ministry of Finance to partially compensate for the high under recoveries. The prices of diesel, LPG and kerosene, which are responsible for the large under recoveries, are unchanged. Experts suggest that the price hike would have a limited impact on inflation, since petrol has a weightage of around 1 per cent on the Wholesale Price Index, whereas diesel has a weightage of around 4.7 per cent. The petrol price hike is unlikely to have an impact on the fiscal deficit, since petrol prices are technically deregulated. Reports suggest that a panel of ministers is due to meet on Friday to discuss diesel, kerosene and LPG prices. In a 2010 report, the Expert Group on "A Viable and Sustainable System of Pricing of Petroleum Products" (Kelkar Committee) observed that given India’s dependence on imports and rising oil prices, domestic prices of petroleum products must match international prices. It stated that price controls on diesel and petroleum in particular had resulted in major imbalances in consumption patterns across the country. This had also led to the exit of private sector oil marketing companies from the market, and affected domestic competition. Its recommendations included the following:
Reports suggest that a partial rollback of petrol prices might be considered soon.
The right to food and food security have been widely discussed in the media. The National Food Security Bill, 2011, which makes the right to food a legal right, is currently pending in Parliament. The Bill seeks to deliver food security by providing specific entitlements to certain groups of individuals through the Targeted Public Distribution System, a large-scale subsidised foodgrain distribution system. The Standing Committee on Food, Consumer Affairs and Public Distribution presented its report on the Food Security Bill on January 17, 2013. It made recommendations on key issues such as the categorisation of beneficiaries, cash transfers and cost sharing between the centre and states. A comparison of the Bill and Committee’s recommendations are given below.
|
Issue |
Food Security Bill |
Standing Committee’s Recommendations |
| Who will get food security? | 75% of the rural and 50% of the urban population (to be divided into priority and general categories). Of these, at least 46% of the rural and 28% of urban populations will be priority (the rest will be general). | Uniform category: Priority, general and other categories shall be collapsed into ‘included’ and ‘excluded’ categories.Included category shall extend to 75% of the rural and 50% of the urban population. |
| How will they be identified? | The centre shall prescribe guidelines for identifying households; states shall identify the specific households. | The centre should clearly define criteria for exclusion and consult with states to create inclusion criteria. |
| What will they get? | Priority:7 kg foodgrains/person/month (at Rs 3/kg for wheat, Rs 2/kg for rice, Rs 1/kg for coarse grains).General: 3 kg foodgrains/person/ month (at 50% of MSP). | Included: 5 kg foodgrains/person/month (at subsidised prices). Pulses, sugar, etc., should be provided in addition to foodgrains. |
| Reforms to TPDS | Doorstep delivery of foodgrains to ration shops, use of information technology, etc. | Implement specific IT reforms, for e.g. CCTV cameras in godowns, use of internet, and GPS tracking of vehicles carrying foodgrains. Evaluate implementation of TPDS every 5 yrs. |
| Cost-sharing between centre and states | Costs will be shared between centre and states. Mechanism for cost-sharing will be determined by the centre. | Finance Commission and states should be consulted regarding additional expenditure to be borne by states to implement the Bill. |
| Cash Transfers | Schemes such as cash transfer and food coupons shall be introduced in lieu of foodgrains. | Cash transfers should not be introduced at this time. Adequate banking infrastructure needs to be set up before introduction. |
| Time limit for implementation | The Act shall come into force on a date specified by the centre. | States to be provided reasonable time limit i.e., 1 year, after which Act will come into force. |
To access the Bill, a detailed comparison of the Standing Committee recommendations and the Bill, and other relevant reports relevant, see here.
