POL prices reversed on SC order

ISLAMABAD: The government reduced the prices of petroleum products on Tuesday after the Supreme Court temporarily suspended the implementation of the carbon surcharge and directed the Oil and Gas Regulatory Authority (OGRA) earlier in the day to issue a notification. According to an OGRA notification issued late on Tuesday, the government has withdrawn the carbon tax and reduced POL prices that would come into effect today (Wednesday). According to the notification, petrol prices have been reduced by Rs 11.55 per litre to Rs 50.58 from 62.13, a reduction of 18.6 percent; HOBC prices by Rs 16.24 per litre to Rs 62.54 from 78.78, a reduction of 20 percent; kerosene oil prices by Rs 6.46 per litre to Rs 52.89 from Rs 59.35, a reduction of 11 percent; and light diesel oil prices by Rs 3.48 per litre to Rs 51.46 from Rs 54.94, a reduction of 6.33 percent.

Earlier on Tuesday, a three-member bench – headed by Chief Justice Iftikhar Chaudhry – said the implementation of the carbon tax would remain suspended until a final decision in the case, and then adjourned proceedings until July 9.

PPP Senator Rukhsana Zubairi and PML-N Secretary General Iqbal Zafar Jhagra had filed separate petitions challenging the increase in petroleum prices.

In its short order, the court said as the government had made no effort to protect the environment through carbon tax, it had no right to charge people for the facility.

The court also summoned the environment secretary at the next hearing for an explanation on whether the ministry had proposed the carbon tax.

Appearing on notice, Attorney General Latif Khosa told the court that the government had to impose the tax in order to overcome the budget deficit.

The chief justice, however, observed that such decisions were not in accordance with good governance.

A judicial commission had earlier presented its interim report on rising oil prices in the country and proposed a “fair and proper cut” in petroleum prices.

Fiscal deficit to be cut to 4%: FM
Wednesday, July 08,2009
NEW DELHI: Widening fiscal deficit is a worry that can pull back the economy from the high growth trajectory that the government is aiming at. The government, in its Budget, has stated that the deficit is projected to widen to an 18-year high of 6.8 per cent of GDP.

Finance Minister Pranab Mukherjee Tuesday said “We will strive to bring down fiscal deficit to 5.5 per cent in 2010-11 and to 4 per cent in 2011-12.”

The Finance Minister was speaking at a post-Budget interactive session with industry associations here Tuesday.

“The government is looking at inputs from the 13th Finance Commission’s recommendation to prune the widening deficit,” Finance Secretary Ashok Chawla said.

There are many ways of doing the same and the Finance Commission is likely to look at fiscal responsibility budgetary management (FRBM) to contain deficit.

However, inflation, which is also impacted by high government spending is partly to be blamed because of higher minimum support price (MSP) for farm produce announced by the government.

However, the government is confident that the wholesale price index, which is at the moment negative, is likely to remain moderate.

“We expect that the wholesale index is likely to go up by 2-3 per cent by March 2010,” Chawla said.

“The recommendations of the commission are going to be incorporated as to the method of bringing in excess expenditure in order,” he added.

With states also allowed to borrow from markets even if their fiscal deficit increases to 4 per cent of their GDP against the current limit of 3.5 per cent, the combined fiscal deficit of India will easily touch the double-digit mark.

However, Mukherjee committed to return to fiscal consolidation part at the earliest, even as the 13th Finance Commission is seized of the issue of setting up new targets for fiscal deficit.

“I intend to return to the FRBM target for fiscal deficit at the earliest and as soon as the negative effects of the global crisis on the Indian economy have been overcome,” the FM said.

Fiscal deficit was originally estimated at 2.5 per cent of GDP last fiscal but it widened to 6.2 per cent after the government cut excise duties by 6 per cent, service tax by 2 per cent and increased planned outlet to spur the slowing-down economy after the Lehman Brothers collapsed in the US.