Looks like all panels appointed by the government in matters of 'pricings' think that 'they will not get their bread and butter' unless they propose a substantial hike!
What I find amusing is that none of these panels ever go into digging out the actual cost of production, cost of raw materials, and the profitability that must/should be allowed! All they do is 'coming out with recommendations/proposals of hiking the existing price with shallow explanations!' Read the appended article and other details provided in the link and draw your own conclusion. U. G. Barad ARTICLE: Parikh panel for Rs 5 hike in diesel prices Also wants kerosene to be made costlier by Rs 4 a litre and cooking gas by Rs 250 a cylinder to cut fuel subsidy bill WEB LINK: http://www.business-standard.com/article/economy-policy/parikh-panel-for-rs- 5-hike-in-diesel-prices-113103000918_1.html The Kirit Parikh committee, asked to revisit the pricing methodology of petroleum products, has recommended to the government an increase of Rs 5 a litre in diesel, Rs 250 a cylinder in LPG (cooking gas) and Rs 4 a litre in kerosene with immediate effect. The suggestions are likely to be considered at the cabinet by December. It also suggested a cap on diesel subsidy by oil marketing companies (OMCs) at Rs 6 a litre, which along with the rise it recommends would collectively save at least Rs 40,000 crore of the government's subsidy burden. On the tussle over export parity pricing for OMCs between the finance and petroleum ministries, the panel recommended against any change in the present trade parity pricing formula, despite a note on its stand from the finance ministry. At present, the prices of petrol and diesel are calculated by taking into account 2.5 per cent Customs duty to the refinery gate price, along with freight rates. The finance ministry wanted to save Rs 13,000 crore on underrecovery every year. "We found that there is hardly any difference between EPP and TPP. Hence, it was suggested that since the government has already decided to eventually free the diesel price, there is no need to tinker with the existing pricing formula, which, even if modified, will not solve the problem of mounting under-recoveries incurred on sales of controlled products, mainly due to high international crude prices and depreciation of Indian rupee," Parikh said. The committee, headed by former planning commission member Parikh, had P K Singh, joint secretary from the petroleum ministry; S Garg, joint secretary from the finance ministry; IIM Ahmedabad professor S K Barua and petroleum ministry joint secretary R K Singh. According to petroleum ministry sources, the recommendations of the committee would be taken up before the cabinet by the end of November or early December. While pinning hopes on the Direct Benefits Transfer programme for transfer of susbsidies, the committee suggested that the price of subsidised domestic LPG be raised by Rs 250 a cylinder immediately and the balance subsidy be phased out over the next two years through a gradual price increase. The limit for subsidised cylinders be reduced from the present nine to six cylinders per annum to each household and the DBTL scheme be restricted to identified families based on an exclusion criteria Meanwhile, it has suggested a fresh formula for upstream companies such as Oil and Natural Gas Corporation and Oil India under the New Exploration Licensing Policy regime on a slab-based discount scheme. If the crude oil price is below $80 a barrel, the upstream contribution would be 40 per cent; between $80-120 per barrel, it would be 40 per cent, adding 0.25 per cent for each $1 barrel increase beyond $80 a barrel. If prices are above $120 a barrel, the upstream contribution was suggested at half the crude price.
