The Finance Minister, Mr Pranab Mukherjee, today defended the Government's move to raise prices of petroleum products saying the country does not control fluctuations in the global market. India requires more than 100 million tonnes of crude oil every year.

“Our production is around 34-35 million tonnes,” the Minister said, after a meeting with State Government representatives from the Western Zone and chief executives of public-sector banks and financial institutions.

“Seventy-five per cent of our crude requirement is imported. The Government and the people of India have no say in the prices of crude oil. During the entire NDA (BJP-led National Democratic Alliance) regime, the average prices of crude oil per barrel varied from $24 to $36. Today, it is $113 a barrel. “Therefore, the prices at which petroleum products were made available in the 1998-2004 period cannot be made available today when the crude oil prices are more than five-six times higher,” said Mr Mukherjee.

He said that the Government was still providing substantial subsidy despite some recent rate hikes. “So far as petroleum products are concerned, those who are criticising us should remember, it was during their time (NDA regime) that all petroleum products were decontrolled,” said Mr Mukherjee.

Farm Credit

On another note, banks, he said, may have raised the expectations of the Government by over-delivering on agriculture credit. Pointing out that banks were exceeding agriculture credit targets every year, Mr Mukherjee said he was sure that this year bank credit to this segment will surpass Rs 5 lakh crore. “Every year we are observing that banks are always exceeding the agriculture credit target. In 2010-11, though the target was Rs 3.75 lakh crore, banks lent Rs 4.47 lakh crore.

This year we fixed the target at Rs 4.75 lakh crore in the Budget. I'm pretty sure that the credit flow to the agriculture sector will go beyond Rs 5 lakh crore,” said Mr Mukherjee, after a meeting with State Government representatives from the Western Zone and chief executives of public-sector banks and financial institutions.

Supply chain constraints

The Government has finalised operational guidelines for providing assistance to create and modernise warehousing infrastructure under the Rural Infrastructure Development Fund.

“Warehousing infrastructure is one of the major reform areas where investments should take place. We see at some point of time vegetables, fruits and other perishable goods not being properly stored and wasted.

“At the growers' level, they are compelled to sell them at throwaway price and at the consumers' end we find that they have to pay a very high price,” said Mr Mukherjee.

The Government has requested the States to address supply-chain constraints, which is one of the reasons for high prices of certain essential commodities, he explained.

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