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.
Over the next few weeks, Assembly elections are scheduled to be held in five States – Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. As parties prepare for the upcoming elections, we take a look at the electoral trends in these states over the past 25 years. We see that electoral fortunes in some states have fluctuated widely. The electoral mandate in UP has varied over the last 25 years. Five different parties -- Congress, Janata Dal, BJP, SP and BSP have been the single largest party in the Assembly at some point in time. In Punjab, the Akalis and the Congress have alternately controlled the government. In Uttarakhand, the 2007 elections saw the BJP take over control from the Congress. In Manipur and Goa, Congress has been dominant player in elections. In both states, it emerged as the single largest party in all but one election since 1984. In Manipur, the Congress lost this status to the Manipur State Congress Party (MSCP), a splinter group of the Congress in 2000. In Goa, it lost this status to BJP in 2002. The results of Uttar Pradesh elections will have the highest impact on national politics. The state has 80 out of 543 elected seats in Lok Sabha and 31 out of 231 elected seats in Rajya Sabha. The results could give an indication of the prospects for these parties in the next general elections, and may also change the composition of Rajya Sabha over the next few years. Given that there are five parties (BSP, SP, BJP, Congress and RLD) with a significant base in the state, the possibilities of post poll arrangements are also wide open. For more details, see our Vital Stats.
