(FE)
The ministry of petroleum and natural gas has written to the finance ministry, seeking an additional Rs 33,000 crore over and above the Rs 24,833-crore petroleum subsidy allocated as revised estimate for 2018-19. The extra demand is primarily because the government did not clear subsidy payments worth Rs33,900 crore for liquefied petroleum gas (LPG) and kerosene in 2018-19, which affected the net profits of oil marketing companies and increased their debt. “The additional amount has been asked to meet the outstanding from the previous year,” a source said.
In the Interim Budget, Rs37,478 crore has been allocated as petroleum subsidy for 2019-20 which may be just enough to meet the requirement for the current financial year (if oil prices spiral due to US-Iran stand-off, this may turn out to be insufficient also). So, the new demand from the oil ministry would indeed pressure the government which is under a fiscal stress. Though rolling over of a part of fuel subsidy has been a custom, building a bill of huge arrears would reflect negatively on the fiscal rectitude and rating agencies could take note of it.
