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:

  • Since petrol and diesel are both items of final consumption, their prices should be market determined at both the refinery gate and the retail level.
  • An additional excise duty should be levied on diesel cars.
  • A transparent and effective distribution system for PDS kerosene and domestic LPG should be ensured through UID.
  • Price of kerosene and domestic LPG should be increased by Rs 6/litre and Rs 100 per cylinder respectively.  The prices should be periodically revised based on growth in per capita agricultural GDP (for kerosene) and rising per capita income (LPG).

Reports suggest that a partial rollback of petrol prices might be considered soon.  

A recent news report stated that the Planning Commission has advocated putting in place a “proper regulatory mechanism” before permitting the use of genetic modification in Indian crops.  A recent Standing Committee report on genetically modified (GM) crops found shortcomings in the regulatory framework for such crops.  The current framework is regulated primarily by two bodies: the Genetic Engineering Appraisal Committee (GEAC) and the Review Committee on Genetic Manipulation (RCGM).  Given the inadequacy of the regulatory framework, the Standing Committee recommended that all research and development activities on transgenic crops be carried out only in containment (in laboratories) and that ongoing field trials in all states be discontinued.  The blog provides a brief background on GM crops, their regulation in India and the key recommendations of the Standing Committee. What is GM technology? GM crops are usually developed through the insertion or deletion of genes from plant cells.  Bt technology is a type of genetic modification in crops.  It was introduced in India with Bt cotton.  The debate around GM crops has revolved around issues of economic efficacy, human health, consumer choice and farmers’ rights.  Some advantages of Bt technology are that it increases crop yield, decreases the use of pesticides, and improves quality of crops.  However, the technology has also been known to cause crop loss due to resistance developed by pests and destruction of local crop varieties, impacting biodiversity. Approval process for commercial release of GM crops

  1. Initially, the company developing the GM crop undertakes several biosafety assessments including, environmental, food, and feed safety assessments in containment.
  2. This is followed by Bio-safety Research Trials which require prior approval of the regulators, the GEAC and the RCGM.
  3. Approval for environmental release is accorded by the GEAC after considering the findings of bio-safety studies.
  4. Finally, commercial release is permitted only for those GM crops found to be safe for humans and the environment.

Committee’s recommendations for strengthening the regulatory process The Standing Committee report found several shortcomings in the regulatory framework, some of which are as follows:

  • State governments are not mandatorily consulted for conducting open field trials on GM crops.  Several states such as Kerala and Bihar have opposed field trials for GM crops.  The Committee recommended that mandatory consultation with state governments be built into the regulatory process.
  • The key regulators, the GEAC and the RCGM, suffer from poor organisational set-up and infrastructure.  The Committee recommended that the regulatory framework be given statutory backing so that there is no scope for ambiguity or complacency on the part of the authorities responsible for the oversight of GM organisms.  It urged the government to introduce the Biotechnology Regulatory Authority Bill.
  • There is evidence that the GEAC has not complied with international treaties.  These include the Cartagena Protocol on Biosafety and the Rio Declaration on Environment and Development.  It recommended that legislation relating to liability and redress for damage arising from living modified organisms be enacted.
  • Some international scientists have raised doubts about the safety of Bt Brinjal and the way tests were conducted.  To remedy this situation, the Committee recognised the need for an overarching legislation on biosafety to ensure that biotechnology is introduced without compromising the safety of biodiversity, human and livestock health, and environmental protection.

Note that over the last few sessions of Parliament, the government has listed the Biotechnology Regulatory Authority Bill for introduction; however the Bill has not been introduced yet.  The Bill sets up an independent authority for the regulation of GM crops. For a PRS summary of the report and access to the full report, see here and here.