Would India explain i) Details of the diesel subsidy, and provide ii) The amount of the diesel subsidy each year from 2006/07 to 2009/10?
Reply: The oil marketing companies had to bear cost of Rs 12647 cr, Rs 18776 cr, 35166 cr and 52286 cr for the years 2005 06, 2006 07, 2007 08 and 2008 09 respectively, on account of under recoveries on sale of Diesel. As India imports about 80% of its crude oil requirement, international oil prices play a decisive role in the domestic pricing of sensitive petroleum products. The Public Sector Oil Marketing Companies (OMCs) viz. Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited pay trade parity price to refineries when they buy diesel, and pay import parity price for PDS kerosene and domestic LPG. Accordingly, they ought to fix retail prices based on this cost. However, the retail prices, which are modulated by the Government, are generally lower. The difference between the required price based on trade parity/import parity and the actual selling price realized (excluding taxes and dealer's commission) represents the under recoveries of OMCs.
