Bangalore: Oil Marketing Companies (OMCs) of India, namely – Bharat Petroleum, Indian Oil and Hindustan Petroleum, are getting depleted of about 388 crore per day, reports R. Jagganathan of First Post. This loss amounts to about 16.6 crores per hour.

The author states how this depletion is due to improperly implemented subsidies. Unproductive and fruitless subsidies have been the bane of our government for a very long time and this has resulted in heated debates over their effectiveness. According to Business Standard, the Indian government earned about 86,000 crore in 2011 by lessening excise and custom duties on tax on dividend, indirect taxes, corporate income tax and tax on profit petroleum. The subsidies provided by the Center, Oil and Natural Gas Corporation (ONGC), Gas Authority of India (GAIL) and Oil India amount to 90,000 crore, which indicates that the government is operating at a loss. The net under-recoveries of various oil firms is estimated to be about Rs1,32,000 crore this year.

The author opines that this year is a good time to free prices of petroleum as the direct subsidies offered by the Center are way more than the taxes collected. He says that the Center’s decision to reduce various duties to the least, do away with subsidies and free prices of petroleum will result in fractional increase in diesel at petrol bunks. Also, receiving subsidies directly from big firms like, GAIL, ONGC and Oil India, would result in price cutbacks in petrol, kerosene and other petroleum products. He says that gathering big indirect taxes from oil firms and providing subsidies on this amount does not seem very logical.  

He offers a possible solution of deregulating diesel prices and doing away with direct subsidies. According to the Petroleum Planning and Analysis Cell of the government, diesel will get a subsidy of 11.30 per liter, while domestic LPG will be priced at 326 per cylinder and kerosene will be offered on a discount of Rs 28.50. The author requests the government to bring all these numerals to zero.