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 implementation of the Food Safety and Standards Act, 2006 has run into rough weather. The Act consolidates eight laws[1] governing the food sector and establishes the Food Safety and Standards Authority (FSSA) as the regulator. It requires all food business operators (including small businesses and street vendors) to obtain a licence or registration. The Regulations under FSSA related to procedure for obtaining a licence or registration was notified on August 1, 2011. According to the Regulations, all food business operators had to get a licence or registration within one year of the notification. Due to opposition from several food business operators (see here and here), the FSSA has now extended the deadline for getting a licence or registration by another six months (till February 2013). However, some of the key concerns regarding the law have not yet been addressed.
Key issues related to the Bill raised by PRS (for more details see Legislative Brief)
Other issues referred to in the media
[1]. (a) The Prevention of Food Adulteration Act, 1954. (b) The Fruit Products Order, 1955. (c) The Meat Food Products Order, 1973. (d) The Vegetable Oil Products (Control) Order, 1947. (e) The Edible Oils Packaging (Regulation) Order, 1998. (f) The Solvent Extracted Oil, De oiled Meal, and Edible Flour (Control) Order, 1967. (g) The Milk and Milk Products Order, 1992. (h) Any other order issued under the Essential Commodities Act, 1955, relating to food.
