Friday, September 14, 2012

Dearness Allowance fails to keep pace with Galloping Inflation

Diesel dearer by Rs 5/litre, 6-refill cap on LPG subsidy
Swaraj Thapa : New Delhi, Fri Sep 14 2012, 01:43 hrs
Biting the fuel price hike bullet, the Manmohan Singh government today decided to increase diesel prices by Rs 5 per litre but left kerosene and petrol prices untouched. In a bid to partially plug the subsidy hole owing to cooking gas, the government also decided to limit the number of subsidised gas cylinders to six per household per year. The unsubsidised market rate will add up to Rs 746 per cylinder. These decisions were taken at a meeting of the Cabinet Committee on Political Affairs (CCPA) this evening. Both Trinamool Congress representative and Railway Minister Mukul Roy as well as DMK representative and Chemicals and Fertilisers Minister M K Alagiri skipped the meeting.
The decision to hike diesel prices came even as a Cabinet meeting tomorrow is set to give the long awaited push to the UPA’s reforms agenda by easing FDI norms in civil aviation, power and broadcasting sectors, besides moving proposals to divest equity in seven state-run companies.
Diesel, domestic LPG and PDS kerosene rates have not been changed since June 2011. While the Congress core group cleared the fuel price hike at its meeting last Tuesday, the party also seems to have succeeded in narrowing down differences with allies on its economic policies.
Even as the TMC and DMK skipped the CCPA meeting today, there were indications that the two allies may have agreed not to rock the boat although they would publicly oppose the fuel hike. To this extent, the scope of a partial reduction in diesel prices is not being ruled out.
The Centre is bracing for an attack from the Opposition BJP and Left parties as well as the SP and BSP.
But significantly, the government seems to be finally moving on the reforms and economy front, especially after the battering it has been facing on the coal block allocations controversy.
At the Cabinet meeting tomorrow, the government is set to take up crucial decisions aimed at increasing FDI inflows in civil aviation, power and broadcasting sectors. FDI in civil aviation, which has been opposed by the Trinamool Congress, will allow foreign airlines to pick up stake in Indian carriers, helping cash-strapped airlines like Kingfisher.
The government also proposes to hike the FDI limit in cable and DTH carriage services from the current 49 per cent to 74 per cent.
The third proposal is to allow FDI in running of electricity exchanges in the country. The Cabinet will also consider proposals for disinvestment in seven PSUs, including National Aluminium Limited Company (NALCO), RITES, Neyveli Lignite, Hindustan Copper, Steel Authority of India Limited (SAIL) and Mines and Minerals Trading Corporation (MMTC).
If the reforms are approved tomorrow, government managers hinted that the ambitious proposal to allow FDI in retail — another issue on which the Trinamool Congress does not see eye to eye with the Congress — may also be taken up in the coming weeks. Diesel dearer by Rs 5/litre, 6-refill cap on LPG subsidy

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