sustainable and inclusive, domestic prices should be aligned to international costĒ.
Based on the recommendations of Dr Kelkar, the government is reportedly working on removing subsidy on diesel by next year; on LPG 25% in current year and 75% in the next two years and by one-third on kerosene in 2014-15.
Whether or not the Kelkar roadmap will be implemented, especially considering that this coincides with impending electionsóstates in 2013 and general elections in 2014óremains to be seen. What is on the anvil for power and fertilisers?
For fertilisers, in 2000, the Expenditure Reforms Commission (ERC) had come up with a roadmap for phased de-control and subsidy removal. This was to be achieved by 2005-06. ERC report was consigned to memory lane. This should be resurrected.
In power, the ministry of power has made the availment of restructuring package contingent on states ensuring that SEBs raise tariffs to remove the gap between revenue and cost. However, a majority of them are reluctant to commit and therefore have not come forward.
The practice of allowing revenue to remain below cost must be shunned irrespective of whether there is a package or not. In fact, handing out a package (a similar package was given in 2002) makes states complacent, necessitating these to be given in perpetuity.
The government should quickly get into action mode in both these critical areas. Mechanisms need to be put in place to ensure that prices/tariff reflect cost of inputs including gas. That will help in reining in subsidy and potential backlash on the viability of fertiliser industry and SEBsócourtesy fiscal constraints. Until we see demonstrable action in both these critical areas, the government should refrain from acting on the recommendations of the Rangarajan panel.
The author is executive director, CropLife India, New Delhi. Views are personal