The Government has been issuing Oil Bonds to Oil Marketing Companies (OMC) to cover the large losses being made by the OMC's. The OMC's have not been able to pass on the increase in prices to the end users due to "political compulsions" likely to be faced by the politicians if the prices were increased. These Bond issuances go against the spirit of the Fiscal Responsibility and Budgetary Management (FRBM) Act.
The Fiscal Responsibility and Budgetary Management Act passed by the Indian parliament in 2004 attempts to limit the revenue deficit into a specific policy target. The Act requires the central government to wipe out the revenue deficit completely by the end of 2008-09.
Such Bond issuances bypass the FRBM requirement. What’s more it is not restricted to the oil sector alone; the Fertilizer industry has also been a recipient of similar bonds.
It’s a pity that the capable team of Dr Manmohan Singh, Dr Montek Singh Ahluwalia & Mr P. Chidambaram are not able to live upto their ability. Is the coalition politics to blame? The answer is quite simple.
The Fiscal Responsibility and Budgetary Management Act passed by the Indian parliament in 2004 attempts to limit the revenue deficit into a specific policy target. The Act requires the central government to wipe out the revenue deficit completely by the end of 2008-09.
Such Bond issuances bypass the FRBM requirement. What’s more it is not restricted to the oil sector alone; the Fertilizer industry has also been a recipient of similar bonds.
It’s a pity that the capable team of Dr Manmohan Singh, Dr Montek Singh Ahluwalia & Mr P. Chidambaram are not able to live upto their ability. Is the coalition politics to blame? The answer is quite simple.
