定价中不道德问题的案例研究case study

e which included elements like shipping charges up to the Indian ports, insurance, transit losses, import duties and other levies and charges. It was followed by Administered Price Mechanism (APM) which involved artificial price fixing by the government from time to time and hike or reduction in the prices which became a political decision, rather than being a rational economic decision. The decision to dismantle the APM was taken to shift from artificial pricing of petroleum products towards pricing situation driven by demand and supply market forces. The government bought into force a new pricing mechanism with effect from 1st April 2002. The new mechanism was designed to isolate the prices of petroleum products in the country from volatile international crude oil prices. At the same time it was to ensure that the prices of certain products like kerosene and LPG remained subsidized as per the government policy.

The weakness of this new system came into the forefront with a spurt in the crude oil prices. On 5 July 2010, Protests were held against a hike in fuel prices shut down of markets, schools, airports and businesses across India and thousands of people were arrested as violence flared in some cities.

Due to the unsteady pricing mechanism in the country, Finance Minister Pranab Mukherjee while presenting Budget 2009-10 on July 6, 2009 established a committee to advice on a viable and sustainable system of pricing petroleum products. Dr. Parikh was appointed the chairman of this panel in August 2009.

Judgment:

Key Recommendations from the Parikh Committee:

Domestic petroleum product prices have to reflect that of international prices. The government should allow pass-through of international oil prices to domestic users. This will enable the public sector OMCs and upstream oil companies to remain financially stable and solvent.

There is no justification for continuance of subsidy for diesel and petrol and as such their prices should be raised by Rs 2.33 per lts and Rs 4.72 per lts respectively.

An additional excise duty of Rs 80,000 per vehicle should be levied on diesel car owners.

Smartcards should be used to provide subsidy to the target/needy group on kerosene and 14.2 LPG cylinders. Subsidy on LPG cylinders should be discontinued immediately except for the below the poverty line households.

The price of kerosene should be increased by Rs 6 per litre and that of LPG by Rs 100 per cylinder. The kerosene price increase should be in line with the nominal growth in agricultural GDP. LPG price should be increased in line with per capita income.

The government’s policy of incurring a cost of Rs 1.42 lakh crore towards compensating the OMCs for the under recover