Rangarajan: Tough stand

New Delhi, Feb. 17: The recommendations of an official panel has now boomeranged on the government itself.

The C.R. Rangarajan committee on petroleum sector, which submitted its report today, has recommended a hefty hike of Rs 75 per cylinder in the price of LPG while proposing an increase of Rs 1.21 and Rs 1.96 per litre in the rates of petrol and diesel, respectively.

However, petroleum minister Murli Deora, who received the report, has said the government was not in favour of raising the price of cooking gas.

The minister said, “It will be my endeavour that the common man continues to get LPG and kerosene at affordable prices.”

He said all political parties, including the Congress and its allies, were against any hike in cooking gas prices.

“I have also spoken to the chief ministers of the states on the issue and every one is opposed to increasing the price,” he added.

The Rangarajan committee had been appointed to work out a pricing formula for petroleum products as the public sector oil companies have plunged into the red due to soaring crude costs and static domestic prices of petroleum products.

The committee has recommended that after a one-time increase of Rs 75 per cylinder of LPG, the price should be gradually increased in phases till the subsidy is eliminated.

In the case of kerosene, it has recommended restricting the subsidy to families living below the poverty line (BPL).

On excise duty, he suggested shifting from the current mix of specific and ad valorem levies to a specific levy of Rs 5 per litre on diesel and Rs 14.75 per litre on petrol.

This will ensure the tax burden on consumers does not go up each time the prices go up, Rangarajan said.

Rangarajan said restricting subsidised kerosene to BPL families would reduce the subsidy bill by 40 per cent.

The committee has also recommended that the cess on crude output paid by ONGC and OIL be increased from Rs 1,800 per tonne to Rs 4,800. This fund would be used for subsidising petroleum products in lieu of the ad hoc amounts of compensation that the government siphons off from these companies to partially compensate downstream Indian Oil, Bharat Petroleum and Hindustan Petroleum for selling LPG and kerosene below the market price.