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Economy in bad shape, need to be pragmatic on subsidies: SC

Last Updated: Monday, September 16, 2013 - 19:15

New Delhi: The Supreme Court on Monday cleared the decks for Centre for not providing subsidised diesel to bulk consumers of public utility services like Railways and state transport corporations, saying the economy is in bad shape and pragmatic approach is needed to be taken on subsidies.

The apex court said that stereotype thinking on subsidy has to be changed as economy, which has been hit by falling value of Rupee, has to survive and Public Transport Corporations have to find out means to sustain themselves without getting subsidy.

"We have to change mindset. You(transport corporations) just cannot sustain on subsidy. You have to find ways and means to sustain. You have to charge from public. We cannot ignore the fact that oil is imported. Stereotype thinking has to be changed. How can you continue to survive on subsidy," a bench headed by Justice R M Lodha said.

The bench, also comprising Justice Madan B Lokur, set aside the stay orders on the implementation of Centre's policy on deregulation of diesel prices passed by Madras and Kerala High Courts.

The bench took into consideration that 83 percent of the oil is being imported and any subsidy on its price would hit the Government oil companies. It also suggested that the transport corporations should devise means to cut the cost of operations and charge public in order to recover from the burden of increased fuel bill.

"A very balanced approach has to be taken. Economy is not in good shape and ultimately it has to survive," the bench said, adding, "We have to take note of the fact that oil is imported and value of Rupee is going down and it is impacting current account deficit of the government."

In January this year, Government had decided to charge bulk consumers like state transport corporations, Railways and defence market price of diesel which is costlier by Rs.14.50 per litre than what is available at petrol pumps.

The court passed the order on petitions filed by Indian Oil Corporation challenging the order of the High Court which had stayed government decision for not giving subsidy to bulk consumers.

Earlier, it had stayed all proceedings in various high courts against moves to decontrol diesel.

The oil companies pleaded that it was a policy decision of the Centre and Railways too has to abide by it.

"The primary objective behind the pricing reforms... Is the growing imperative for fiscal consolidation, the need for reducing the subsidy burden on petroleum products so as to allocate more funds to social sector schemes for the common man and for ensuring country's energy security in the long term," the petition had said.


First Published: Monday, September 16, 2013 - 19:15
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