Chidambaram in New Delhi on Wednesday. Picture by Prem Singh

New Delhi, Oct. 4: Finance minister P. Chidambaram today indicated that the current decline in international crude prices will not be passed on to consumers as the oil companies are still bearing a heavy subsidy burden on the sale of LPG and kerosene.

“When international oil prices increased, we did not pass on the entire burden to consumers and the reduced international oil prices have only lessened the subsidy burden of firms like ONGC, oil marketing companies and the government,” Chidambaram told reporters on the sidelines of an exposition on khadi, village and coir industries.

The reduced subsidy burden would mean that funds would be available for re-investment by these companies, he said.

The finance minister added that reduced international prices would not affect the size of oil bonds to be issued by the government later.

The government had earlier said oil bonds worth Rs 14,150 crore would be issued to oil companies in September. However, Chidambaram refused to comment on whether the government would stick to this time schedule for issuing oil bonds.

The oil marketing companies are reported to be earning a profit of Rs 1.50 a litre on sale of petrol, but still losing about Rs 3 on diesel compared with international prices of these fuels. The oil companies were earlier losing Rs 6 per litre on diesel sales.

Cluster approach

The government has decided to set up an inter-ministerial group to lay down a policy for developing manufacturing clusters. The move is expected to ensure greater co-ordination between different ministries.

Chidambaram said, “Recognising the usefulness of the cluster approach for manufacturing, the government is in the process of constituting an empowered group of ministers to lay down a policy on cluster development and oversee its implementation.”