A day after the Finance Minister spoke of the need to swallow ‘bitter medicine’ for fiscal consolidation, Prime Minister Manmohan Singh hinted at a fuel price hike.
In the same breath, he promised to alter the policy environment to accelerate growth.
Addressing the 85th Annual General Meeting of industry chamber FICCI, the Prime Minister promised to address the concerns on GAAR and taxation of the IT sector along with giving high priority to finalisation of the Direct Taxes Code and the Goods and Services Tax. He admitted that a year or two of excessive pessimism at home has hurt the growth process.
“But I stand before you to reassure you that our Government is committed to doing everything that is possible to alter the policy environment, to accelerate economic growth and to make the growth process socially and regionally more inclusive,” he told industry captains.
Under-recovery hurting
On the issue of fuel subsidies, he said that “”…on oil alone are more than what the Government spends on health and education put together. We need to address these issues even as we ensure that the poor and the vulnerable are effectively protected. ”
This statement comes at a time when the under-recovery (the result of selling fuel below the cost of production) on diesel applicable for the fortnight starting December 1 rose to Rs 10.03/litre.
Under-recovery in the case of domestic LPG has risen sharply to Rs 520.50/cylinder against Rs 478.50 for November. The under-recovery on PDS kerosene too has remained at high level of Rs 30.93 a litre for December, though slightly lower than Rs 31.30 a litre for November.
“Under-pricing of energy, particularly electricity and petroleum products, has greatly affected the resources available for investments in infrastructure as well as and social development,” Singh added.
Oil companies are compensated a part of the under-recovery by the Government and some by upstream oil companies such as ONGC, Oil India and GAIL.
Reservation for SC/ST
Amidst the ongoing debate on reservation, the Prime Minister recalled affirmative action by the private sector. “Five years ago, while addressing a similar conference of Indian business I had spelt out a 10 Point Social Charter for business and Government. I do not to wish to repeat those points today, but would only say that the corporate sector must own up its responsibility in supporting affirmative action designed to provide employment opportunities for the under-privileged sections, persons with disabilities and women,” he said.