Diesel price decontrol: Can't sustain all subsidies, says Supreme Court

Written by Utkarsh Anand | New Delhi | Updated: Sep 17 2013, 03:23am hrs
Diesel priceDiesel subsidy: Economy is not in good shape and ultimately it has to survive, says Supreme Court. Reuters
The Supreme Court on Monday advocated a balanced approach on subsidies so that the India's economy not just survives but also thrives.

The court upheld the decontrol of diesel prices for bulk consumers, who had challenged the governments policy in various high courts. Some of these cases had travelled to the Supreme Court.

We have to keep in mind that the rupee is going down against the dollar. It is affecting the current account deficit (CAD) of the government. Especially the last month was really bad for the economy. The country cannot sustain all types of subsidies. There has to be a balanced approach and stereotypes will have to be removed, a bench of Justices R M Lodha and Madan B Lokur said.

There needs to be proper fiscal management, the bench said. A balanced approach is needed to see that the economy not just survives but also thrives. We cannot lose sight of the fact that majority of diesel is imported. Economy is not in good shape and ultimately it has to survive.

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Dealing with two petitions involving the state public transport corporations of Kerala and Andhra Pradesh, the court said that such entities should give up their dependence on subsidies and find other means to sustain themselves.

There will be at least 20 such state transport corporations. We also know most of these corporations dont have any professional management or work culture and are also overstaffed. So will it be practical to continue giving subsidies to all of them the court asked.

It said pragmatic decisions were required on subsidies: the corporations must find ways to cut costs and recover money from the public. Attorney General G E Vahanvati had earlier told the court that fares would increase 22 per cent if the corporations were treated as bulk consumers.

The bench held that all state transport corporations shall be treated as bulk consumers, and would have to pay full market rates for diesel having regard to the facts and circumstances that 83 per cent of the diesel is imported and current value of rupee has substantially gone down....