Oil prices linked to world prices: Montek

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New Delhi: In the face of rising global crude oil prices, the Planning Commission has said that domestic prices of petrol, diesel and cooking gas should be linked to oil prices in the international market.

"They (prices of petroleum products) should be linked to world prices," Planning Commission Deputy Chairman Montek Singh Ahluwalia told PTI when asked about the global crude prices now surging to about 70 dollars a barrel.

On whether he agreed with Petroleum Minister Murli Deora, who favoured deregulating domestic prices of petroleum products, he said, "The Planning Commission's view, which is reflected in the integrated energy policy, is that domestic petroleum prices should reflect world prices."

Noting that the country imports 70 per cent of its crude oil requirement, Ahluwalia said, "I don't think it is sustainable to delink domestic prices from import costs.

"The idea of subsidising imported products (crude oil), which are mainly consumed by the well-off, doesn't make sense," he said.

As regards subsidy for the poor, Ahluwalia said, "There is a need for a targeted subsidy for the vulnerable population to assure access to essential items like kerosene for the poor, but that can be handled."

According to the Petroleum Ministry, India's crude oil import basket has averaged USD 70.49 per barrel in the second fortnight of June against the May average of USD 58.

With the recent spike in oil prices in the global market, reports suggest, the state-run oil companies, including Indian Oil, Hindustan Petroleum and Bharat Petroleum are losing about Rs 135 crore per day on sale of petrol, diesel, cooking gas and kerosene.

PSUs lose Rs 2.96 a litre on diesel and Rs 6.08 per litre on petrol. The annual losses of the oil companies, as per recent calculations, during the current fiscal could mount to Rs 38,700 crore.

Asked about rising global commodity prices, Ahluwalia said, rising commodity prices need not worry us. "If the global economy is recovering India will do better and the commodity prices should not cause us to worry," he added.