New Delhi: Due to the policy of administered pricing of petrol, diesel, LPG and kerosene, the under recoveries on account of the subsidised petroleum for 2011-12 were to the tune of Rs 1,40,000 crore. This does not include the under-recovery on account of petrol as its price was set free but with Indian characteristics.
The government has not permitted the oil marketing companies (OMCs) to raise petrol price and also has not recognised its obligation to compensate the OMCs for it. Only recently petrol price has been raised. This has increased the difference between petrol and diesel prices substantially. As a consequence, the domestic sale of diesel has grown at a higher rate than petrol for the first time in 14 years. Also the consumption of diesel has grown in the 2011-2012 at 7.5 per cent. The 7.5 per cent growth rate cannot be explained by the growth rate of GDP or by that of a rise in number of diesel-driven vehicles. Since diesel price is controlled but furnace oil is free, in December 2011, the retail price of diesel adjusted for calorie difference was Rs 7 per litre lower than that of furnace oil. As a result diesel is fed in place of furnace oil.
On February 24, 2012, diesel price was Rs 40.90 a litre compared to Rs 65.64 for petrol. As a consequence, the share of diesel-driven passenger cars has increased and has become 50 per cent of the sale of new cars. They
11:36 AM, Jul 17, 2012