A day after agreeing to dole out a record Rs 100,000 crore in fuel subsidy for 2012-13, Finance Minister P Chidambaram today said cash payouts to oil firms this fiscal will be just Rs 20,000 crore.
At a meeting called by Prime Minister Manmohan Singh, the Finance Minister had yesterday agreed to give an additional Rs 45,000 crore on top of the Rs 55,000 crore already paid to oil firms for selling diesel, cooking gas (LPG) and kerosene at government-controlled rates.
"We have done our sums and this Rs 45,000 crore is being given yesterday on account but we do not expect any more claims from the Ministry of Petroleum and Natural Gas for 2012-13," Mr Chidambaram told reporters here.
State fuel retailers had lost Rs 161,029 crore in revenues on selling diesel, domestic LPG and kerosene at government controlled rates which are way below market price.
With yesterday's Rs 45,000 crore, the government has committed to make good Rs 100,000 crore out of this.
Another Rs 60,000 crore will be chipped in by upstream firms like ONGC.
"In fact there (Oil Ministry's) own number indicated Rs 161,000 crore (of under-recovery or revenue loss) and if you take note of the fact that we gave them Rs 55,000 crore earlier and Rs 45,000 crore yesterday, that takes care of Rs 100,000 crore and Rs 60,000 crore (would) come from the upstream companies so thats take care of it," he said.
The additional Rs 45,000 crore payment will come out of Rs 65,000 crore budget for fuel subsidy in the current fiscal, leaving just Rs 20,000 crore.
Also, upstream firms will be expected to chip in Rs 60,000 crore, equal to what they did in 2012-13.
"Now for this year the budgeted (fuel subsidy is) Rs 65,000. We still have Rs 20,000 crore (after paying Rs 45,000
crore) and another Rs 60,000 crore will come from upstream companies," Mr Chidambaram said.
Chidambaram said the economic situation in India has been improving with decline in wholesale and retail inflation.
"...agriculture and labour-based inflation have come down, core inflation has come down, WPI headline inflation is below 5 per cent, CPI based inflation is coming down, inflows are copious and someone from the media told me that he is seeing more advertisement revenues in the last two weeks", the minister said.
Admitting that certain numbers coming out of China were disappointing and also the quantitative easing programme in Japan could run into problems, Chidambaram said, "these are factors that are peculiar to the China market and the Japan market (and) they have no relevance at all to the situation in India."
Later talking to reporters, Chief Economic Advisor Raghuram Rajan said: "I think Federal Reserve said yesterday there is no intent to end it (quantitative easing) early. My reading of (Bernanke's) statement is that they are going to continue. In that sense we will have to deal with consequences of quantitative easing when it comes."
India, Rajan said, got $5 billion FII in May alone and has been able to finance Current Account Deficit (CAD) quite comfortably and "there is no panic based need for new measures."
As regards the value of rupee, Rajan said, "we are not the worst but we are also not the best either in terms of depreciation. We are watching the rupee, but I won't say it is out of sync with what is happening in other countries."
"Look at all other currencies, the Euro has also depreciated against the dollar. Actually Japanese yen has
done more than the rupee", he added.
The rupee today declined by a hefty 37 paise to trade at a fresh six-month low of 55.83 in early trade at the Interbank Foreign Exchange market on sustained dollar demand and strengthening of the US currency overseas.
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