Deora meets law minister, Pranab on Anils outburst

THE Congress battery of official spokespersons declined to comment on the record. However, two senior Congress leaders, one a two-term chief minister of a large North Indian state and the other a member of the Union Cabinet said that the party may have to take a stand because the allegations of favouritism against a senior cabinet minister could hurt the image of the party and the government. Both declined to discuss specifics or to spell out what that stand could be. Some political observers feel that another empowered group of ministers (EGOM) may have to be set up to resolve the dispute. Mr Deora is believed to be opposed to this. On Tuesday evening, Mr Deora met law minister Veerappa Moily and finance minister Pranab Mukherjee to discuss the days developments . The outcome of the meeting isnt clear though a source said the ministers had decided to support the petroleum ministrys move to file a special leave petition (SLP) in the Supreme Court seeking scrapping of those parts of the family settlement pertaining to the supply of gas.  In the speech, Mr Ambani referred several times to his father claiming that RIL was deviating from the founders philosophy. In refusing to execute a bonafide commercial agreement RIL has no regard for... morality in its headlong pursuit of corporate greed, he claimed.  In the AGM speech, while extensively updating shareholders of Reliance Natural Resources (RNRL) on recent developments of its four-year-old gas dispute with RIL, Mr Ambani said the petroleum ministrys stand was aimed at helping RIL renege on its contractual commitments with RNRL as well as stateowned NTPC.  Mr Ambani lashed out at the petroleum minister Mr Deora in no uncertain terms. I am sure all private companies in India wish that if they made commercial decisions they wished to get out of, they too had a saviour to bail them out as is the case for RIL.  He said that he had written a letter on this subject to Prime Minister Manmohan Singh. He was confident that Dr Singh would support the cause of truth and justice , and ensure neutrality of the government in a pure commercial dispute between two corporate entities . Despite the directness of his speech, Mr Ambani was careful to confine his attacks to Mr Deora.  The legal dispute between RIL and RNRL is now being fought at the Supreme Court, following a Bombay High Court order in June which ordered RIL to sell gas from its Krishna Godavari basin to RNRL for $2.34 per mmBtu for 17 years. This was lower than the government set price of $4.20 per mmBtu. The petroleum ministry had also joined the case in the apex court by filing a special leave petition (SLP) seeking annulment of the gas supply contract between RIL and RNRL. The Supreme Court will hear the case next on September 1. The SLP and crossappeals filed by both sides will come up for admission before the Supreme Court.  The facts are deliberately being twisted by the oil ministry to say the corporate agreement between RIL and RNRL is a private division of sovereign assets, Anil Ambani said, rejecting the contention that the gas price was set as part of a private agreement between the brothers in 2005.  He also criticised the petroleum ministrys stand that RIL had violated the product sharing contract (PSC) with the government by promising gas to RNRL without informing the government. Frankly, if the petroleum ministry is genuinely aggrieved... why dont they exercise their powers and terminate the PSC and take back the ownership of the gas fields from RIL when the provisions exist for them to do so he asked.  He said the ministrys claim that it was not aware of the agreement between the Ambani brothers was untrue. He said the ministry had been in possession of all relevant details of the gas deal since April 2006 when RIL provided details of the gas pact to the ministry.  He also attacked the petroleum ministry for its claims that the sale price of the KG basin gas was fixed at $4.20 per mmBtu. Drawing a parallel to stamp duty on property, which acts as a reference rate and has no bearing on the actual transaction price, he said $4.20 per mmBtu was fixed for the calculation of the governments share of profit from the gas sale.  Also, he emphasised that the government would not lose money if RIL sells gas at a lower price of $2.34 per mmBtu, as directed by the Bombay High Court in June. Under the PSC, 99% of all revenues and profits would go to RIL and the remaining 1% to the government in the initial years. Of the initial revenue of Rs 50,000 crore from the gas sale, RIL will get Rs 49,500 crore, he said. Makes you wonder why the petroleum ministry is pushing so hard for higher gas prices, when 99% gains will go to RIL, he said sarcastically.  According to him, NTPC is also affected by RILs machinations. NTPC has been fighting a separate legal tussle to obtain gas from RILs KG D-6 .  Giving details of the global gas scenario, he said the price of the industrial fuel had crashed 80% and the gas price of $4.2 per mmBtu (fixed by the government ) was exorbitant and against public interest. The ministrys role runs counter to the view of others in the government that it shouldnt play any role in price-setting , Mr Ambani said.  The petroleum ministry has unilaterally gone ahead and taken a stand, which runs contrary to that of the cabinet sub-group , apparently without even consulting it, even though that group represented the broader collective wisdom of several other ministers, including the ministers of finance, law, power and fertilisers, he said on Tuesday.  Anil Ambani said Reliance Industries is seeking an exit from its obligations. It is unfortunate that Reliance Industries has tried every trick in the book and apparently several outside the book to back out of its solemn, legal and contractual obligations, he said.

What me worry? Scriptwriters urge India Inc to look deeper

Those In The Hot Seat Defend The Budget, Allay Fears Of A Ballooning Fiscal Deficit NOWbrought together policy makers, political leaders, businessmen and ET editors in a high-powered panel discussion on the Budget at prime time Monday evening. There was broad consensus that the markets had misunderstood the FM and the reaction of the Sensex was seen more as an aberration than an indicator of the quality of the Budget. Said deputy chairman of the Planning Commission, Montek Singh Ahluwalia: "I don't think what happens to the Sensex for a few hours after the Budget means anything. This is intra-day trading. I don't think it's a relevant signal as no serious investor will look at investing in the markets during or immediately post the budget."     Kotak Bank MD and VC Uday Kotak said the Budget needed to be examined at two levels. He thought that when it came to stimulating domestic demand, the Budget had been extremely positive, However, he believed there was more support needed for capital formation, which had not been addressed in this Budget.     The fact that the Budget had not addressed specifics in the area of disinvestment, which has been seen as a big dampener by the markets, was something that revenue secretary PV Bhide thought was an overreaction. He pointed out that disinvestment has been mentioned and would take place in due course, adding specific targets would have been criticised as excessive or too less, either way.     While the government was silent on the FDI regime, finance secretary Ashok Chawla said India's FDI regime was open and most sectors have 100% FDI, while very few had sectoral caps. There was no need to state that over and over again, he said.     Mr Chawla acknowledged that the government's borrowing programme will be a challenge. "The market was aware that the fiscal deficit would be high. The net borrowings stand at about Rs 4 lakh crore. The market will not have the appetite to borrow the entire amount as it will only upset the apple cart. What we are working on along with the RBI is to have open market operations of 50% of the net borrowing. So close to Rs 2 lakh crore will be raised through open market operations."     Mr Bhide reiterated that GST will be implemented by April 1, 2010.     Mr Ahluwalia acknowledged that there was the possibility of a downgrade by rating agencies but appeared not to ascribe much importance to their actions. "Countries around the world are running high fiscal deficits. But the question is whether there is an exit strategy to help reduce the deficit over a two-to-threeyear period as the world economy recovers. The bottomline is that the fiscal deficit is high and one must not be defensive about it this year. Will we be able to bring it down, and the answer to that is 'yes'."     "Rating agencies have known to be wrong in the past. The UK government has just been downgraded by rating agencies. Getting downgraded is not a matter of concern," he said.     ET NOW consulting editor Swaminathan Aiyer, said the government had shot itself in the foot as it had not created an appropriate mood in the market. This in turn would result in the market not taking an active part in the disinvestment plan. "Markets are also to blame because they went mad after the elections," he said.     Editor (opinion) at The Economic Times MK Venu felt the Budget has not been negative on any section although businesses expected excise duties to be rolled back, a measure that did not materialise. Subsidies, Mr Kotak felt, were facing pressure on the revenue front though if India continued to hold out well, there would be an upside on the revenue front.     CPI (M) MP Neelotpal Basu added, "Unfortunately, the incremental expenditure outlay of GDP is too small to provide impetus for growth and is not beneficial for the poor as health and education expenditure was too little."     ET NOW THE MARKET WAS AWARE THAT FISCAL DEFICIT WOULD BE HIGH. NET BORROWINGS ARE AT ABOUT RS 4 LAKH CR. IT WILL NOT HAVE THE APPETITE TO BORROW THE ENTIRE AMOUNT. WE ARE WORKING WITH RBI TO HAVE OPEN MARKET OPERATIONS OF 50% OF THE NET BORROWING ASHOK CHAWLAUNION FINANCE SECRETARY THE BUDGET NEEDS TO BE EXAMINED AT TWO LEVELS. WHEN IT COMES TO STIMULATING DOMESTIC DEMAND, IT HAS BEEN EXTREMELY POSITIVE. HOWEVER, MORE SUPPORT IS NEEDED FOR CAPITAL FORMATION, WHICH HAS NOT BEEN ADDRESSED IN THIS BUDGET UDAY KOTAK KOTAK MAHINDRA MD & VC I DON'T THINK WHAT HAPPENS TO THE SENSEX FOR A FEW HOURS AFTER THE BUDGET MEANS ANYTHING. THIS IS INTRA-DAY TRADING. NO SERIOUS INVESTOR WILL ACTUALLY LOOK AT INVESTING IN THE MARKETS DURING OR IMMEDIATELY POST THE BUDGET MONTEK SINGH AHLUWALIA DEPUTY CHAIRMAN PLANNING COMMISSION THE IMPRESSION THAT THE BUDGET HAS NOT ADDRESSED THE SPECIFICS OF DISINVESTMENT, IS AN OVERREACTION     PV BHIDE     UNION REVENUE SECRETARY

Small cos get big tax break

MORE THAN 10 MILLION MICRO AND small enterprises around the country are likely to welcome the Budget announcement that has given businesses with annual turnover of less than Rs 40 lakh the option of not maintaining their books of accounts and pay income tax on a fixed 8% of their revenues.     Finance minister Pranab Mukherjee said that such businesses would have the option of not paying advance taxes. The new scheme, which will come into effect from the financial year 2010-11, is also expected to provide a thrust to new entrepreneurship in the country as it will reduce entry barriers for budding entrepreneurs.     "The proposal will rid a very large number of businesses from harassment by Income Tax authorities and reduce paperwork," Federation of Indian Micro and Small & Medium Enterprises (FISME) secretary general Anil Bhardwaj told ET. Ashoka Novelty Centre, a Rs 20-lakh gift shop in Delhi's Sadar Baazar, for instance, currently hires a chartered accountant to help maintain its books and pays taxes at the rate of 20%. Partner Tara Chand Gupta said that the new rules will help him reduce the cost of hiring a CA and also avoid bureaucratic hassles and harassment by tax authorities. "We can now concentrate on our business," Mr Gupta added.     It will also diminish the burden of tax authorities as they will now have to deal with lesser number of cases, files and returns from assesses since the number of entities up to a turnover of Rs 40 lakh is huge, law firm Kochhar & Co managing partner Rohit Kochhar added.     In fact, the Budget brought a lot of good news for the MSME sector. Irritants such as fringe benefit tax (FBT) and commodity transaction tax (CTT) have been done away with. Abolition of CTT will, in the long run, reduce raw material costs for SMEs.

Small cos get big tax break

MORE THAN 10 MILLION MICRO AND small enterprises around the country are likely to welcome the Budget announcement that has given businesses with annual turnover of less than Rs 40 lakh the option of not maintaining their books of accounts and pay income tax on a fixed 8% of their revenues.     Finance minister Pranab Mukherjee said that such businesses would have the option of not paying advance taxes. The new scheme, which will come into effect from the financial year 2010-11, is also expected to provide a thrust to new entrepreneurship in the country as it will reduce entry barriers for budding entrepreneurs.     "The proposal will rid a very large number of businesses from harassment by Income Tax authorities and reduce paperwork," Federation of Indian Micro and Small & Medium Enterprises (FISME) secretary general Anil Bhardwaj told ET. Ashoka Novelty Centre, a Rs 20-lakh gift shop in Delhi's Sadar Baazar, for instance, currently hires a chartered accountant to help maintain its books and pays taxes at the rate of 20%. Partner Tara Chand Gupta said that the new rules will help him reduce the cost of hiring a CA and also avoid bureaucratic hassles and harassment by tax authorities. "We can now concentrate on our business," Mr Gupta added.     It will also diminish the burden of tax authorities as they will now have to deal with lesser number of cases, files and returns from assesses since the number of entities up to a turnover of Rs 40 lakh is huge, law firm Kochhar & Co managing partner Rohit Kochhar added.     In fact, the Budget brought a lot of good news for the MSME sector. Irritants such as fringe benefit tax (FBT) and commodity transaction tax (CTT) have been done away with. Abolition of CTT will, in the long run, reduce raw material costs for SMEs.

GREEN SHOOTS of recovery in full bloom

THE ECONOMIC SURVEY'S BENT ON SWEEPING REFORMS AND AUGURY OF GLAD TIDINGS TO COME ARE NICELY LARDED WITH CLUES TO OVERCOME THE EXPECTED STUMBLING BLOCKS  PRAKASH Karat would approve. The survey pooh-poohs the dire, sub-6% growth forecasts of western, capitalist outfits such as the World Bank and the OECD for India. The economy is poised for a U-shaped recovery, with the last two quarters of the last fiscal and the first two quarters of 2009-10 forming the trough.     And growth thereafter would be robust enough to push up the overall growth rate for 2009-10 to anything between 6.25% and 7.75%, depending on how well the world economy fares. And economy-wide inflation was only 6.2% for 2008-09 and is expected to remain muted this fiscal as well.     The upbeat mood continues when it comes to suggesting reforms across the board, including labour reform, disinvestment to raise Rs 25,000 a year and a ban on foreign institutional investors bringing in anonymous investors through sub-accounts. The survey prognosticates sustained growth in foreign capital inflows.     The only place where it suggests a less-thanhappy story is in the balance of external payments: India could turn a net exporter of capital, running up a current account surplus in 2009-10, instead of absorbing foreign savings in the net, as over the last five years.     The survey has sensibly devoted separate chapters to the state of the economy and to policy options on what is to be done. A key suggestion is to aim for deficit targets over the business cycle, rather than at every point of it, recognising the counter-cyclical potential of the fiscal policy. However, a target of 0% over the cycle seems too severe.     The survey claims the fiscal deficit would shrink sharply beginning 2010-11. By then, it would shed two burdens: farm loan waiver and arrears of the Sixth Pay Commission award to civil servants, which jacked up the contribution of government consumption in overall growth to 32.5% in 2008-09 from an average of 7% for the previous three years. Fiscal consolidation would have to be aided by sharp curtailment of fuel subsidies, deregulation of oil prices when crude prices are below $80, reorganisation of subsidy by making most transfers directly to the beneficiary using smart cards.     When ministers change, the survey too changes its tune. It suggests that taxes introduced over the last five years, such as the securities transaction tax, the commodities transaction tax, fringe benefit tax and cesses are ill-advised. Instead of a dividend distribution tax on companies, dividends should be taxed in the hands of investors. In the world of demat accounts, this is not a difficult scheme to implement, and would be fairer to minority shareholders.     Indeed, the survey calls for pressing ahead with financial sector reform, on the ground that this is the only way to ensure that funds are intermediated to dynamic entrepreneurs and that they will have sufficient means to hedge assorted risks.     To its credit, the survey is big on governance reform to achieve institutional efficacy and accountability. An innovative suggestion to this end is a web-based Public Accountability Information System that puts in the public domain all data on projects, funds and those employed so that anyone can challenge it and hold the system accountable.     The survey endorses the inclusive growth agenda but wants better ways of spending the money to ensure that the intended benefit is achieved. If the survey were a horse, all reformers would ride.     Will the FM? High Lights Decline in growth rate in private consumption and gross fixed capital formation a key concern for the economy Per capita income & consumption at Rs 31,278 and Rs 17,344 in 2008-09, but survey says there is a slowdown in growth rates Domestic food prices still a worry. Survey suggests a pricing regime for food grain to balance interest of producers and consumers Moots a return to FRBM targets for fiscal deficit at the earliest, possibly by 2010-11. Estimates fiscal stimulus at 4.8% of GDP Challenges and outlook: Worst may be behind us THE survey says the palpable fallout of the global financial crisis on the industry and trade sectors has permeated to the services sector. It, however, argues that the worst may be over and the monetary and fiscal measures taken by the government could facilitate a quick 'U'-shaped recovery. Subject to some caveats such as policy reforms, a normal monsoon and the US economy bottoming out by September 2009, it pegs the GDP growth in 2009-10 at 7.0+/- 0.75%. In the event of prolonged global slump, the survey warns the recovery could be delayed to early 2010. PRIME numbers 6.7% GROWTH IN 2008-09. SLUMP ONLY SPARED MINING & GOVT BOOSTED SOCIAL SERVICES 27% SHARE OF PVT CONSUMPTION TO AGGREGATE GROWTH, DOWN SHARPLY FROM 53.8% IN 2007-08. A MAJOR WORRY 6.2% THE OVERALL RETAIL INFLATION IN 2008-09, AS MEASURED BY THE GDP DEFLATOR 75% DEPENDENCE ON IMPORTED CRUDE. SURVEY SEES ANY SHARP HIKE IN GLOBAL OIL RATES A BIG RISK TO ECONOMY SUBSCRIBE TO Free SMS Alerts on India Stock Markets OR SEND SMS "ON WAY2TRADE  " TO 9870807070 |DisasterAwareness | Health | Insurance |  Forex| Commodities| Earn decent money by receiving SMSes on your cell phone.  Free Signup! Chat ways2invest wilint Contact Me Ways2Health Overweight children at higher risk of asthma

SURVEY CALLS FOR SWEEPING REFORMS THAT MAY STAY ON PAPER

THE Economic Survey predicts GDP growth as high as 7.75% in 2009-10 if the global economy turns up by autumn, and a reasonable 6.25% if the global recession drags on. Exuding confidence on the external front, the survey predicts a current account surplus of up to 2.8% of GDP and estimates that FDI inflow into India in 2008 was $46.5 billion. The document suggests that disinvestment of public sector undertakings can raise at least Rs 25,000 crore per year for the government. The details of the asset-sale plan will be announced by finance minister Pranab Mukherjee when he presents the Budget for the year to March 31, 2010, on July 6, finance secretary Ashok Chawla told reporters. The survey also suggests the re-introduction of tax on dividends (in place of the corporate dividend tax). If implemented, millionaires, who today pay no tax on dividends, will pay it henceforth at the highest rate. The document claims that high savings and investment rates, rural prosperity and resilient services exports have kept the economy going despite horrendous global conditions. It focuses less on the need for fresh economic stimuli than on post-recession strategy to reverse fiscal and monetary easing, and stresses the need to return to FRBM targets, possibly by 2010-11.     Replete with dozens of suggestions for economic reforms, the survey is clearly a Montek-Virmani document rather than a Sonia-Pranab Mukherjee one. It represents the reformism of technocrats rather than the realpolitik of politicians. Once upon a time, the Economic Survey used to be viewed as a declaration of intent of the government. This time, it is better viewed as a declaration of despair by technocrats, listing reforms that are urgently needed, but that have no hope of political acceptance.     On the fiscal side, the proposed reforms include a cyclically-adjusted zero-deficit target; limiting LPG consumption to 6-8 cylinders/year per family; replacing subsidised kerosene with solar lanterns and cookers; decontrolling petrol, diesel, and fertiliser and sugar industries; freeing fertiliser prices and instead giving fertiliser subsidies directly to farmers; auctioning 3G spectrum; eliminating tax exemptions and moving towards a uniform duty structure that eliminates inverted duties; lifting the ban on agricultural futures; liberalising spot and future currency markets; auctioning rights to external commercial borrowings; phasing in FDI limits in banks and aligning voting rights with shareholding; allowing private sector entry into coal mining and nuclear power; creating a competitive electricity market by liberalising open access; raising FDI limits to 49% in insurance, and to 100% for companies providing every type of insurance; raising the FDI limit to 49% in defence industries; implementing police, judicial and administrative reforms; and amending labour laws to permit up to 12 hours work per day, including overtime. Agri credit was up by 23% in '08-09 THAT is a reform agenda which, if taken seriously by the government, would send the Sensex soaring to 20,000. In fact, the Sensex shot up only briefly, and then ended flat, after marketmen realised that the survey had produced no more than a technocratic wishlist, not to be mistaken for a blueprint for action.     The survey spells out in detail what the government has done — and will continue to do — for the aam aadmi. Agricultural credit went up by 23%, and industrial credit by 21.6% in 2008-09. Bharat Nirman, the rural infrastructure programme, has been provided Rs 40,900 crore in the Interim Budget 2009-10, against Rs 31,280 crore the previous year. More than 4.47 crore households were provided work under the National Rural Employment Guarantee Act in 2008-09, up from 3.39 crore the previous year. Of the 215 crore person-days of work created, 29% and 25% went to scheduled castes and tribes, respectively. The food subsidy shot up 40% to Rs 43,668 crore in 2008-09, and will presumably rise still higher once the Food Security Act is enacted and implemented. The survey expresses apprehensions of a poor global agricultural harvest this year, which may send global prices up and put pressure on food security. This implies that the government may be cautious in permitting food exports.     The share of social services in the central government spending has risen from 11.23% in 2002-03 to 19.4%. The National Rural Health Mission has created a massive cadre of 6.5 lakh accredited social health activists.     Eight crore farmers have been given kisan cards. The government provided Rs 25,000 crore for the farm loan waiver last year, and will provide most of the balance this year. It will also provide most of the balance of the Pay Commission arrears to employees. SUBSCRIBE TO Free SMS Alerts on India Stock Markets OR SEND SMS "ON WAY2TRADE  " TO 9870807070 |DisasterAwareness | Health | Insurance |  Forex| Commodities| Earn decent money by receiving SMSes on your cell phone.  Free Signup! Chat ways2invest wilint Contact Me Ways2Health Overweight children at higher risk of asthma

TechM to up Satyam stake via pref allotment

Open Offer Gets Poor Response Due To Spike In Satyam Share Price  TECH Mahindra's open offer for an additional 20% in Satyam Computer Services has received a cold response from shareholders of the scamhit company as the offer was unattractive after the recent smart rally in Satyam shares. Tech Mahindra will now exercise the option of increasing its stake through the preferential allotment, as mentioned in the bidding document. After the preferential allotment, Tech Mahindra's stake in Satyam will rise to 42% from the current 31%, according to Tech Mahindra executives.     "The number of shares tendered has been very miniscule," said an official with Kotak Mahindra Capital, which managed the offer. "We are awaiting exact figures from the registrar, which will be available on July 2." A few ADS holders are also learnt to have tendered their shares in the offer. On Wednesday, Satyam shares closed 3.7% up at Rs 73.55 on BSE, well above the open offer price of Rs 58 per share. The scrip has surged 30% in past month. TechM has deposited Rs 1,155 crore in the escrow account, which will be used for raising stake to 42-43% in Satyam, via the preferential allotment.     Allotment of fresh equity shares will have to be completed within 15 days of the closure of the offer, according to current capital market norms.     Although Tech Mahindra has the option of increasing its stake in Satyam to 51% through preferential allotment of shares, the company is unlikely to exercise it because it will involve an outflow of nearly twice the amount. Tech Mahindra has already pumped in Rs 1,756 crore to acquire a 31% stake in Satyam. SUBSCRIBE TO Free SMS Alerts on India Stock Markets OR SEND SMS "ON WAY2TRADE  " TO 9870807070 |DisasterAwareness | Health | Insurance |  Forex| Commodities| Earn decent money by receiving SMSes on your cell phone.  Free Signup! Chat ways2invest wilint Contact Me Ways2Health Overweight children at higher risk of asthma

Govt hikes petrol prices by Rs 4, diesel by Rs 2

CRUDE WAYS CUTTING LOSSES  THE government on Wednesday raised pump prices of auto fuels to stem the losses of stateowned retailers that sell petrol and diesel below cost price, revealing its intention to deregulate the sector.     Petrol will be costlier by Rs 4 a litre and diesel by Rs 2 a litre from Wednesday midnight. Prices of cooking gas and kerosene were left untouched, as a hike could affect the poorer sections of the society.     The last time auto fuel prices were raised was on June 4, 2008. It was followed by two quick rounds of price cuts in December 2008 and January 2009, well before the general elections were announced, as global crude prices came down sharply. As a result, petrol became cheaper by Rs 10 a litre and diesel by Rs 4 a litre.     Crude oil prices have more than doubled from $33.98 a barrel on February 12, the lowest closing price in 2009, resulting in huge losses to government-owned fuel retailers — IOC, BPCL and HPCL.     The timing of the move is interesting on two counts. Elections for West Bengal civic bodies are over, so coalition partner Mamata Banerjee's opposition to such a move would be muted. The price hike on the eve of the Budget also allows the government to perform two kinds of fiscal reform. One, include fuel subsidies in budgetary accounting instead of fudging figures by counting oil bonds, meant to finance fuel subsidies, as off-budget item. Two, still keep the now-expanded fiscal deficit down by reducing the amount of subsidy on fuels.     The government is planning to compensate stateowned oil marketing companies through budgetary provisions. This will be a departure from the current practice of compensating them through off-budget oil bonds.     Fuel prices were increased after consulting UPA chairperson Sonia Gandhi and Prime Minister Manmohan Singh, oil minister Murli Deora said at a press conference.     Petroleum secretary RS Pandey said the government has not attempted to fully cover the losses of fuel retailers, which were losing Rs 6 on the sale of every litre of petrol and Rs 3.60 on a litre of diesel.     Mr Pandey also hinted that the government may meet revenue losses of fuel retailers from selling fuels at the government-determined rates through a budgetary mechanism.     At the current crude oil price of Indian basket ($70.29 a barrel), the total revenue loss of fuel retailers is estimated at Rs 30,000 crore for 2009-10. The companies are still losing Rs 15.20 a litre on kerosene and Rs 96.8 per cylinder on cooking gas, he said.     The losses of retailers will also be met through upstream discounts. The contribution of upstream companies such as ONGC, Gail India and Oil India will be not be more than what they had given in the past, he said. Upstream cos paid Rs 32k cr as discounts to oil firms LASTyear, upstream companies had to pay about Rs 32,000 crore as discounts to the three public sector oil companies, IOC, BPCL and HPCL. The minister maintained silence over meeting the revenue losses of retailers through oil bonds, a practice followed so far, that saw the quantum of oil bonds jumping by over 100% at Rs 71,000 crore in 2008-09.     "The fuel price deregulation was very much on agenda, and could happen any time," an oil ministry official said, requesting anonymity. But Mr Pandey declined to comment on the government's fuel price deregulation move. Under a proposal, the government is considering to allow fuel retailers to adjust pump prices of petrol and diesel as long as the average price of crude oil used in domestic refineries stays below $75 a barrel. Beyond the cap, the state will step in to protect the consumer. Even within the cap, oil companies will not be allowed to increase retail prices beyond 15-20% at one go. PUMP PRIME Current auto fuel prices in four metros (approx) PERFECT TIMING West Bengal civic elections are over, and crucial coalition partner Mamata Banerjee's opposition to the price hike will be muted The hike in petrol and diesel prices on the eve of the Budget paves the way for the government to perform two kinds of fiscal reforms SMOOTH REFORMS Govt can include fuel subsidies in budgetary accounting, instead of fudging figures by counting oil bonds meant to finance fuel subsidies as off-budget items The Centre can still keep the now-expanded fiscal deficit down, by reducing the amount of subsidy on retail fuels SUBSCRIBE TO Free SMS Alerts on India Stock Markets OR SEND SMS "ON WAY2TRADE  " TO 9870807070 |DisasterAwareness | Health | Insurance |  Forex| Commodities| Earn decent money by receiving SMSes on your cell phone.  Free Signup! Chat ways2invest wilint Contact Me Ways2Health Overweight children at higher risk of asthma