UPA II set up an Expert Group chaired by former Planning Commission member Kirit Parikh, this move of theirs appears to be a planned one as they did not get adequate traction from the Rangarajan Committee report on the pricing and taxation of petroleum products. They do not want to lose the opportunity of pushing ahead with petroleum price decontrol under a government not dependent on Left support.
The committee made it mandatory to examine the pricing policy for four sensitive petroleum products like petrol, diesel, PDS kerosene and domestic LPG and recommend a practical and sustainable pricing strategy for these products.
The opus of the committee suggested that it was expected to recommend wholesale liberalization of the pricing of petroleum products.
The most surprising thing is that the Government had accepted most of the committee's recommendations and raised the prices of petrol, diesel, kerosene and LPG.Moreover they had opted for price decontrol for petrol immediately and announce that a similar transition would follow for diesel in the not too distant future.
The step taken is surprising as inflation is persisting and has become a major cause for concern. The Wholesale Price Index (WPI) figures for May pointed out three worrying trends. Number one- the aggregate annual rate of inflation as reflected in the month-on-month increase in the WPI was near or well above double-digit levels for the consecutive five months. The figure is 10.2 as put in May.
Number 2- the current inflation is steep in the case of some essential commodities, as a result of which the prices of food articles as a whole have risen by 16.5 per cent and of food grains by close to 10 per cent.
Finally, there are indications that what was largely inflation in food prices is now more generalized with fuel prices rising by 13 per cent and manufactured goods prices by 6-7 per cent. The price hike of fuels will aggravate the trend of inflation and burden the common people more.
