Decontrol petrol and diesel prices, says Economic Survey

India's Economic Survey for 2008-09 tabled in Parliament on Thursday has called for decontrolling petrol and diesel prices 'at the earliest' even as the opposition protested the fuel price hike announced a day earlier.

The government increased petrol and diesel prices by nearly 10 per cent on Wednesday, citing as a reason the climbing international oil price which has increased the burden on the state-owned oil marketing companies.

The survey said as long as domestic prices remained below the cost of imports, demand would increase, accentuating the negative impact of the terms of trade effect on national income.

According to it, the fall in the global oil price from the peak of $147 last year could be a "golden opportunity to reform the pricing and control system".

"It says that as the low prices of oil has provided a temporary window for decontrol of petrol and diesel, this window must be utilised at the earliest," said a government communique.

Besides, the survey said other issues like "open access to power, decontrol of coal also need to be addressed to have a viable long-term solution to our dependence on foreign oil and the debilitating effect of power failure".

Highlights of Economic Survey 2008-09
Salient features of a wish list in the Economic Survey for 2008-09 released by Finance Minister Pranab Mukherjee in Parliament on Thursday:

'u00a0Cut fuel, food and fertiliser subsidy leakages

' Raise foreign investment cap in insurance to 49 per cent

' Allow 100 per cent foreign investment in health, weather insurance

' Raise foreign investment cap in defence production to 49 per cent and in high tech defence to 100 per cent

' Raise Rs 25,000 crore from divestment every year

' Sell 5-10 per cent in profitable non-Navratnas

' List unlisted state-owned firms, divest at least 10 per cent equity

' Auction loss-making state-owned firms

' Rationalise dividend distribution tax to avoid double taxation

' Review customs duty exemptions

' Remove fringe benefit tax

' Remove commodity and security transaction taxes

' Limit subsidy on cooking gas to six-eight cylinders per household

' Kerosene subsidy only for non-electrified, non-cylinder homes

' Introduce new income tax code

' Provide fertiliser subsidy directly to farmers

' Target zero fiscal deficit

' Eliminate inverted duty structure

' Convert specific textile taxes to ad valorem

' Lift price control on all drugs except essentials

' Roll back excess liquidity once growth picks up

' Decontrol sugar and insurance industries

' Auction spectrum and make it freely tradable