Petroleum Secretary S Sundareshan, while addressing a press Conference on Friday, announced the government’s decision to deregulate prices of petrol. Petrol prices shall now be subject to periodic revisions based on fluctuations in market prices. An immediate hike of Rs. 3.50 per litre has already been affected. Prices of diesel shall be deregulated in stages while those of kerosene and LPG shall continue to be regulated by the government. For the moment, diesel has been hiked by Rs. 2 per litre, kerosene by Rs. 3 per litre and LPG by Rs. 35 per cylinder. Crude to retail: Pricing and under-recoveries India imports about 80% of its crude oil requirement. Therefore, the cost of petroleum products in India is linked to international prices. The Indian barrel of crude cost $78 in March 2010. Once crude is refined, it is ready for retail. This retail product, is then taxed by the government (both Centre and State) before it is sold to consumers. Taxes are levied primarily for two reasons: to discourage consumption and as a source of revenue. Taxes in India are in line with several developed nations, with the notable exception of the US (See Note 1) Before the current hike, taxes and duties in Delhi accounted for around 48% of the retail price of petrol and 24% of the retail price of diesel. (Click Here for details) Ideally, the retail prices of petroleum products should then be determined as: Retail prices = Cost of production + taxes + profit margins However, in practice, the government indicates the price at which PSU oil companies sell petroleum products. Since these oil companies cannot control the cost of crude (the primary driver of the cost of production) or the taxes, the net result is an effect on their profit margins. In cases where the cost of production and taxes exceeds the prescribed retail price, the profit margins become negative. These negative profit margins are called ‘under-recoveries’. When international crude prices rose above $130 in 2008, under-recoveries reached an all-time high of Rs. 103,292 crore. Even at much lower prices in 2009-10 (averaging at $70 per barrel), under-recoveries totalled Rs. 46,051 crore. (See Note 2) The latest move is an effort to reduce these under-recoveries. The government cited the recommendations of the Kirit Parkih Committee while announcing its decision (Summary - Kirit Parikh Committee report). Any alternatives to price hike? As is evident from above, under-recoveries can also be reduced by decreasing taxes. In fact, one might argue that by both taxing the product and offering a subsidy, the government is complicating the situation. Usually whenever subsidization coexists with taxation, it serves the purpose of redistribution. For example, taxes might be collected universally but subsidy be granted to the weaker sections only. However, this is not the case in the current situation. What needs to be noted here is that these taxes are a very significant source of revenue. In fact, the total taxes paid by the oil sector to the central and state governments were around 3% of GDP in 2008-09 (See Note 3). Reducing taxes now might make it difficult for successive governments to raise taxation rates on petroleum products again. Moreover, though taxes are levied both by the Centre and the States, the subsidy is borne only by the Centre. Hence, the current arrangement is beneficial to the States. Possible future scenarios The opposition has voiced concerns that the hike in prices is likely to lead to even higher inflation and will further burden the consumer. The Chief Economic Advisor to the Finance Ministry, Dr. Kaushik Basu, however, told the media that these changes would have a beneficial effect on the economy. According to him,
"The (decontrol of petrol prices), coupled with price increase for LPG (cooking gas) and kerosene, will have an immediate positive impact on inflation. I expect an increase of 0.9 percentage points in the monthly Wholesale Price Index (WPI) inflation".
However, he added, that since the hike in fuel prices would push down fiscal and revenue deficit,
"they will exert a downward pressure on prices… More importantly, from now on, if there is a global shortage and the international price of crude rises, this signal will be transmitted to the Indian consumer. It will rationalise the way we spend money, the kinds and amount of energy we use, and the cars we manufacture. It is an important step in making India a more efficient, global player”.
It remains to be seen how the actual situation pans out. Notes 1) Share of tax in retail price (%)
Source: Petroleum Planning and Analysis Cell, PRS (Data as of Feb, 2010) 2) Under-recoveries by oil companies (Rs Crore)
|Year||Petrol||Diesel||PDS Kerosene||Domestic LPG||Total|
Source: Petroleum Planning and Analysis Cell, PRS 3) Contribution to Central and State taxes by Oil Sector (2008-09)
Source: Petroleum Planning and Analysis Cell
Yesterday, the Governor of Karnataka promulgated the Karnataka Protection of Right to Freedom of Religion Ordinance, 2022. The Ordinance prohibits forced religious conversions. A Bill with the same provisions as the Ordinance was passed by the Karnataka Legislative Assembly in December 2021. The Bill was pending introduction in the Legislative Council.
In the recent past, Haryana (2022), Madhya Pradesh (2021), and Uttar Pradesh (2021) have passed laws regulating religious conversions. In this blog post, we discuss the key provisions of the Karnataka Ordinance and compare it with existing laws in other states (Table 2).
What religious conversions does the Karnataka Ordinance prohibit?
The Ordinance prohibits forced religious conversions through misrepresentation, coercion, allurement, fraud, or the promise of marriage. Any person who converts another person unlawfully will be penalised, and all offences will be cognizable and non-bailable. Penalties for attempting to forcibly convert someone are highlighted in Table 1. If an institution (such as an orphanage, old age home, or NGO) violates the provisions of the Ordinance, the persons in charge of the institution will be punished as per the provisions in Table 1.
Table 1: Penalties for forced conversion
Fine (in Rs)
Any person through specified means
Minor, woman, SC/ST, or a person of unsound mind
Two or more persons (Mass conversion)
Sources: Karnataka Protection of Right to Freedom of Religion Ordinance, 2022; PRS.
Re-converting to one’s immediate previous religion will not be considered a conversion under the Ordinance. Further, any marriage done for the sole purpose of an unlawful conversion will be prohibited, unless the procedure for religious conversion is followed.
How may one convert their religion?
As per the Ordinance, a person intending to convert their religion is required to send a declaration to the District Magistrate (DM), before and after a conversion ceremony takes place. The pre-conversion declaration must be submitted by both parties (the person converting their religion, and the religious converter), at least 30 days in advance. The Ordinance prescribes penalties for both parties for failing to follow procedure.
After receiving the pre-conversion declarations, the DM will notify the proposed religious conversion in public, and invite objections to the proposed conversion for a period of 30 days. Once a public objection is recorded, the DM will order an enquiry to prove the cause, purpose, and genuine intent of the conversion. If the enquiry finds that an offence has been committed, the DM may initiate criminal action against the convertor. A similar procedure is specified for a post-conversion declaration (by the converted person).
Note that among other states, only Uttar Pradesh requires a post-conversion declaration and a pre-conversion declaration.
After the religious conversion has taken place, the converted person must submit a post-conversion declaration to the DM, within 30 days of the conversion. Further, the converted person must also appear before the DM to confirm their identity and the contents of the declaration. If no complaints are received during this time, the DM will notify the conversion, and inform concerned authorities (employer, officials of various government departments, local government bodies, and heads of educational institutions).
Who may file a complaint?
Similar to laws in other states, any person who has been unlawfully converted, or a person associated to them by blood, marriage, or adoption may file a complaint against an unlawful conversion. Laws in Haryana and Madhya Pradesh allow certain people (those related by blood, adoption, custodianship, or marriage) to file complaints, after seeking permission from the Court. Note that the Karnataka Ordinance allows colleagues (or any associated person) to file a complaint against an unlawful conversion.
*In Chirag Singhvi v. State of Rajasthan, the Rajasthan High Court framed guidelines to regulate religious conversions in the state.