The Group of 20 nations has welcomed the strategies by member countries to phase out oil subsidies -- a bold move followed by India that only on June 25 raised petrol, diesel and cooking fuel prices.
"We welcome the work of Finance and Energy Ministers in delivering implementation strategies and time-frames, based on national circumstances, for the rationalization and phase out over the medium term of inefficient fossil fuel subsidies that encourage wasteful consumption...," the G20 Declaration said at the end of two-day Summit.
Prime Minister Manmohan Singh attended the Summit. The government's price hike decision was based on recommendations of an expert group headed by former Planning Commission member Kirit Parikh.
The group had called for freeing petrol and diesel prices from state control and raising LPG rates by Rs 100 per cylinder and kerosene by Rs 6 per litre.
However, the government settle for freeing only petrol prices, raising diesel by Rs 2 a litre, LPG (cooking gas) by Rs 35 a cylinder and kerosene by Rs 3 per litre. Before the hike, the oil PSUs were projected to lose Rs 74,300 crore on selling petrol, diesel, domestic LPG and kerosene below cost.
The diesel price hike would cut revenue loss by Rs 9,000 crore (Rs 90 billion) and cooking fuel price increase would help them garner Rs 5,000 crore (Rs 50 billion).
A lower fuel subsidy bill may help the government reduce the fiscal deficit substantially. It was an estimated 6.9 per cent last year.
"We also encourage continued and full implementation of country specific strategies and will continue to review progress towards this commitment at upcoming summits," the G20 Declaration said.
