The dismantling of the administered pricing mechanism (APM) in the petroleum sector by the end of the current fiscal is being threatened by the burgeoning oil pool deficit, expected to cross Rs 19,000 crore by March 31, 2002.
The finance ministry is in a fix since in case the APM is dismantled, the oil pool deficit would have to be shifted to the general Budget. The ministry fears that pushing up the fiscal deficit by adding another Rs 19,000 crore to it would tell on the health of the economy.
The oil pool deficit, which was to the order of Rs 12,500 crore on March 31, 2001, is estimated to go past the Rs 19,000-crore mark in case international prices of crude oil rule around $23-24 a barrel and the domestic prices of controlled petroleum products are not raised. Currently, the prices rule at around $28 a barrel.
To somewhat mitigate the problem, the finance ministry has asked the petroleum ministry to
