by V. SRIDHAR
A DEBATE without data would be a meaningless exercise. But a debate with faulty or fudged data would be positively dangerous. The prolonged national “debate” over the need to increase petroleum product prices is exactly that. One of the most important arguments of the government was that the move was urgently needed to stem the bleeding losses of the publicly owned oil companies.
Prime Minister Manmohan Singh, in his televised address to the nation after the hike in the prices of petroleum products, justified it by citing the losses of the public sector oil companies, which he claimed amounted to about Rs.2,45,000 crore. He was, of course, careful in his choice of words; he termed them “under-recoveries”. In commercial parlance one hears of profit and loss, but not of under-recoveries. What, pray, are under-recoveries? The answer to this question would reveal the dirty secret that lies at the heart of the Indian petroleum-pricing regime.
Some simple arithmetic can set the record straight, but the Prime Minister has chosen to constitute a “high-powered committee” to examine the issue. Among the terms of reference of the committee is the task of “revisiting” the notion of under-recoveries. It has also been asked to “examine the reported deficit and real deficit faced by the OMCs [oil marketing companies]”.