constituted - of Planning Commission

5 per cent growth thereon from 2011-12 onwards during the Twelfth Planperiod.Petroleum Subsidy: Expenditure on Petroleum Subsidy increased during theEleventh Plan by 738.30 per cent from `2820 crore in 2007-08 to `23,680 crorein 2011-12.The Thirteenth Finance Commission kept the reassessed base year figuresconstant in nominal terms over the projection period, reflecting the need tocontrol this subsidy if the parameters underlying the calculation (chiefly oilprices) do not change in this duration. The Commission’s assumption is that anyreal growth will be financed through efficiency savings.In the statements under the FRBM Act, it has been mentioned that with respectto rationalization of petroleum subsidy, Government has already decontrolledthe pricing of petrol. In a departure from the past practice, the Government hasstarted providing petroleum subsidy for under recoveries of oil marketingcompanies in cash instead of securities from the year 2009-10. In order to arrestthe diversion of subsidized kerosene oil, LPG and fertilizers and to ensuregreater efficiency, cost effectiveness and better delivery, the Government willmove towards direct transfer of cash subsidy to people living below poverty linein a phased manner.While the projections made by Ministry of Petroleum to the Group were basedon an international crude price of US $110 per barrel and cash assistanceassumed at 2/3 rd of total under recoveries, the Group felt that an average crudeprice of US $100 per barrel would be more realistic for the purpose of makingprojections. Further, keeping in view the fact that in 2010-11, the cashassistance provided worked out to roughly 50 per cent of the under-recoveriesand decision on the percentage of cash assistance to be borne by GovernmentWorking Group Report on Centre’s Financial ResourcesPage-41