There
is no justification for raising the prices of petrol and
other oils due to heavy oil pool deficit, estimated to
be about Rs. 18,000 crore, states Prof.
J.D. Agarwal, Director, Indian Institute of Finance
. According to him, the massive oil pool deficit has been
a result of wrong estimates with regard to the volume
of crude oil imported from abroad in 1996-97 rather than
international price of oil.The current prices of petrol
in the country were originally fixed when the internationl
prices of petrol were at a level of US $ 42/- per barrel.
The petrol prices were of course been revised upward in
between as well due to oil pool deficit.
When
the internationl prices of petrol fell down to half i.e.
US & 22 per barrel, the Govt. Should have reduced
the petrol prices in the country. But the Govt. did not
so and acted as profiteer, exploiting the inelastic demand
of petrol and the the helpless consumers stated Dr. Agarwal.
According to Dr. Agarwal , the whopping increase in oil
import bill which may be estimated to be about US $ 10
bn. in 1997-98, would not due to the rising prices but
because of consumption and therefore has nothing to do
with the retail pricing of petrol. It is likely that the
international crude oil prices might fall further US $
19 per barrel during 1997.The Ministry of petroleum should
generate more realistic estimates about the quantity of
hhe oil to be imported. The massive oil pool deficit is
the reflection of the inefficiency of the Govt. regarding
the estimates generated by them in the past and also regulating
the oil imports. The Govt.Should take serious note of
such abnormal variances, particulary when the international
price of crude oil during the year has stagnated, urged
Dr. Agarwal.
Moreover
Dr. Agarwal feels that the increase in petrol and oil
prices would fuel inflation and bring
down the quality of life of people. It
will be an indirect tax on the pockets of all without
exception which will only promote inefficiency on the
part of those who are connected with oil industry. Dr.
Agarwal has urged upon the Govt. to adopt a more appropriate
acccounting system, where in the pricing og products
like oil should be done on cost plus basis,
exactly the way industrial products are priced in a market
driven economic system. Dr. Agarwal strongly feels that
the objective of a Govt. is maximization of welfare of
people in general rather than creating state monopolies,
breeding inefficiency and exploiting citizens.
