The Hindu : Rising subsidies, oil pool deficit

Online edition of India's National Newspaper
Wednesday, Feb 27, 2002

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Rising subsidies, oil pool deficit

By Our Special Correspondent

NEW DELHI FEB. 26. The Economic Survey has estimated that the oil pool deficit could range from Rs. 14,500 crores to Rs. 21,200 crores as on March 31, 2002. The estimates are linked to international crude prices with the first one based on a price of $25 a barrel and the second at $28 a barrel.

This is considerably higher than the oil pool deficit of Rs. 12,600 crores on March 31 last year. The entire system of oil pool account will now be dismantled and the subsidy for petroleum products will be transferred to the Central Exchequer in the forthcoming budget. This is part of the entire exercise of dismantling the administered pricing mechanism (APM) for the oil sector by April 1 this year.

The level of subsidies during 2000-01 is estimated at Rs. 25,129 crores, according to the Survey.

This includes Rs. 7,360 crores on kerosene through the public distribution system, Rs. 6,640 crores on LPG and Rs. 9,130 crores on diesel.

It explains that the factors affecting surplus and deficit in the oil pool account are domestic prices of controlled petroleum products, fluctuation in international market prices, foreign exchange variations in the Indian rupee, and materialisation of the quantities of estimated demand.

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