While international price of gasoline (against which domestic petrol prices are benchmarked) are more or less at the same level (as at the time of last revision), the rupee has depreciated to about Rs52.70 to a US dollar
New Delhi: Petrol price may be hiked by about a rupee per litre from next month as the Indian currency has weakened against the US dollar making imports costlier, reports PTI.
The rate change may, however, need a political clearance as assembly elections in five crucial states, including Uttar Pradesh and Punjab, have been announced.
“While international price of gasoline (against which domestic petrol prices are benchmarked) are more or less at the same level (as at the time of last revision), the rupee has depreciated to about Rs52.70 to a US dollar,” a top official said.
The domestic rates, which were last revised on 30th November, are pegged at Rs51.50 to a US dollar exchange rate.
The average exchange rate in first fortnight of December was Rs51.98 to a US dollar, which has further deteriorated.
State-owned oil companies like Indian Oil Corporation (IOC) use fortnightly average of benchmark oil price and exchange rate to revise retail rates on 1st and 16th of every month.
The next review is due on 31st December and if the oil companies decide to pass on the exchange rate fluctuations to consumers, the new rates would be effective from 1st January.
“There is an under-recovery of about 85 paise (Rs0.85) per litre currently. After adding local sales tax, the desired increase in retail prices would be Rs1.02 per litre,” the official said.
Oil firms had, at the last review on 15-16 December, decided not to burden the consumers with Rs0.65-Rs0.70 per litre hike in petrol price needed at that time, as they felt Reserve Bank of India’s (RBI) intervention may help arrest fall in rupee’s value.
Petrol at IOC pumps in Delhi is currently priced at Rs65.64 per litre and the rates vary by a couple of paise at the pumps of Bharat Petroleum and Hindustan Petroleum.
The oil firms had in November cut petrol prices twice on drop in international oil rates. The companies reduced petrol prices by Rs2.22 per litre, or 3.2%, from 16th November, followed by a Rs0.78 per litre cut from 1st December.
However, it remains to be seen if the oil firms will get a political nod to increase the prices in view of assembly elections.
Petrol price was freed from government control in June last year but public sector companies continue to informally consult their parent oil ministry before taking a decision.
The government continues to control rates of diesel, domestic LPG and kerosene which were sold way below cost to keep inflation under check. The oil firms lose Rs12.95 per litre on diesel, Rs29.99 a litre on kerosene and Rs287 per 14.2-kg LPG cylinder.
The first meeting would be held with agriculturalists, followed by a series of interactions with sectoral experts, representatives, industry captains and economists over the next ten days to get their feedback and inputs for incorporating them in Budget 2012-13
New Delhi: Amid economic slowdown, finance minister Pranab Mukherjee will hold brainstorming sessions with various stakeholders during his annual pre-budget meetings beginning 11th January, reports PTI.
The first meeting would be held with agriculturalists, followed by a series of interactions with sectoral experts, representatives, industry captains and economists over the next ten days to get their feedback and inputs for incorporating them in Budget 2012-13.
Mr Mukherjee is then slated to meet captains of industry on 13th January, followed by trade union leaders on 16th January.
Mr Mukherjee is expected to elicit views of different interest groups on arresting the economic slowdown and combating the impact of global problems.
The current fiscal has been a difficult year for the country's economy, with growth slipping to 6.9% in the second quarter this fiscal, the lowest in nine quarters.
Besides, industrial output in October saw a sharp de-growth of 5.1% as stock markets remained volatile driven by negative investor sentiment in India and abroad.
Social sector related groups will share ground realities faced by them with Mr Mukherjee on 17th January, followed by a meeting with CEOs of banks and financial institutions on 19th January.
Issues like bank recapitalisation, access to affordable financial services—especially credit and insurance—and interest rates are likely to be discussed in the meeting.
The pre-budget exercise will end with a discussion with economists on 20th January.
A wide range of issues like policy initiatives to fight sluggishness in growth, slump in industrial output and rising fiscal deficit targets are likely to come up for discussion.
Moreover, impending tax reforms like Direct Taxes Code and Goods and Services Tax may also figure in the discussions.
Volatility in the capital markets, mainly driven by global factors, forced the government to repeatedly postpone the public issues by PSUs. In certain cases, the PSUs could not come out with the public offerings because of delay in appointment of independent directors by the government
New Delhi: The government’s disinvestment programme remained on papers with only one public sector undertaking (PSU) hitting the capital market raising only Rs1,145 crore in 2011, as against the target of mopping up Rs40,000 crore during the current fiscal, reports PTI.
During the year, proposals were mooted for disinvestment of several companies, including BHEL, ONGC and SAIL, but none of them saw the light of the day.
Volatility in the capital markets, mainly driven by global factors, forced the government to repeatedly postpone the public issues by PSUs. In certain cases, the PSUs could not come out with the public offerings because of delay in appointment of independent directors by the government.
The department of disinvestment (DoD), which has been mandated to raise Rs40,000 crore, had to think of innovative ways, like buyback of shares by cash rich PSUs to achieve the mammoth target for the current fiscal.
In May, the DoD came out with follow-on public offer (FPO) of Power Finance Corporation (PFC), the only PSU issue which hit the capital market.
The PFC FPO opened on 10th May and closed on 13th May and the issue was subscribed 4.32 times. The company, in which the government diluted 10% stake, gave Rs1,145 crore to the exchequer.
The stake dilution was part of concerted efforts to raise funds to boost government finances.
Anticipating Rs40,000 crore fund mop up through disinvestment, the government had fixed a fiscal deficit target of 4.6% in the current fiscal.
However, with disinvestment target unlikely to be met, the fiscal deficit could exceed the budget estimates.
Besides blue-chip companies like BHEL, ONGC and SAIL, the government had also identified Hindustan Copper (HCL), Rashtriya Ispat Nigam (RINL), National Buildings Construction Corporation (NBCC) and Hindustan Aeronautics (HAL) for disinvestment in the current fiscal.
However, the stake sale had to be put off because of the impact of decline in global markets on Indian bourses. The Indian equity markets benchmark BSE Sensex declined 25% so far in 2011 falling to 15,379.34 points. It was quoting at 20,509 points on 31 December 2010.
Besides, the draft paper for ONGC FPO filed with the Securities and Exchange Board of India (SEBI) was withdrawn for the lack of adequate number of independent directors. The government plans to offload 5% stake that would fetch it around Rs12,000 crore, nearly one-third of the budgeted target.
Besides, plans are on to offload 5% equity in power equipment maker BHEL, which would fetch over Rs4,000 crore and draft papers for which have been filed with the market regulator SEBI.
In view of uncertain market conditions, companies like SAIL and Hindustan Copper (HCL) have deferred fresh equity issue, though the government will go ahead with its proposal to offload stake.
Besides, SAIL FPO has failed to meet deadlines repeatedly since December 2010, due to several reasons, like rising coking coal prices, problems with merchant bankers and adverse market conditions.
The DoD is believed to have identified two dozen cash rich PSUs having a total balance of nearly Rs2 lakh crore for buying back shares.
The companies which have been identified by the government for buyback include SAIL, NMDC, ONGC, NTPC, Coal India, Oil India, MMTC, Neyveli Lignite, NHPC, BHEL and GAIL.
Such companies may be asked to buy back about 5% equity from the shareholders. Under the current regulations, market regulator SEBI allows companies to buy back their own equity from shareholders.
Under the buyback mode, the government can raise money by selling its equity in the company to the concerned PSU itself.
In 2010, the government had raised a record Rs40,000 crore in nine state-owned companies including Coal India, NMDC, NTPC and Rural Electrification Corporation (REC).
The amount was the most raised in a year since the government began the programme of diluting minority stake or privatising vast swathes of public sector companies in 1991-92.