::IMC::

Implement Kirit Parikh panel’s suggestions fully, IMC tells Govt.
Date: 4-Feb-2010

Indian Merchants’ Chamber has welcomed the recommendations of the Kirit Parikh Panel for removal of government control over auto fuels and raising prices of kerosene and cooking gas. Such a measure would not only reduce the heavy subsidy burden on the exchequer, but would also rectify the serious distortions being caused in the domestic market due to the administered prices, the IMC has said. This will also make oil marketing companies economically more viable, as they are losing about Rs. 40,000 crores this fiscal due to underrecoveries.

In a press statement issued here today, IMC President Mr Gul Kripalani asserted that the proposed increase in fuel prices would have some impact on spurring up the current inflationary pressures. But then in a free-market economy, user-price concept, with efficient system of functioning of course, needs to be introduced. Inflationary pressures, which arose mainly due to failure of the monsoon leading to a sharp fall in agricultural production, could be countered only by increasing supplies and ensuring proper distribution of foodgrains, pulses, edible oils and other commodities.

Any subsidy meant for the vulnerable sections in the rural and urban areas should be disbursed to them directly through cash vouchers, and not in the form of commodities. "It is common knowledge that kerosene disbursed through the public distribution systems (PDS) is being diverted on a large scale to the open market for adulteration of other high-value petro-products, thereby defeating the basic purpose of subsidies.”

Mr Kripalani said that the government should not miss this politically opportune moment to deregulate petroleum products prices. "The UPA Government should show the will and political courage. It is necessary to accept the Parikh Panel’s recommendations to deregulate prices of petrol and diesel and raise that of kerosene and LPG. Such a measure will also help reduce the widening fiscal deficit, which has become worrisome, as also remove the backdoor regulation of fuel prices", he said.

He urged all political parties -- both in the opposition and in the ruling alliance -- to pull their weight together towards this deregulation measure, keeping in mind the interest of a healthy national economy.

Arvind Pradhan
Director General