Indian government has recently given ì 7000 crore to OMC’s (oil marketing company) as cash subsidy for losses incurred in last quarter of FY 11 by selling petro products bellow cost price; and in coming days government shall again shell out ì 13,000 for the same reason.
Major Indian OMCs –IOC, HPCL and BPCL, were piling under debt due to under recovery (selling petro products at subsidized rates) being covered by borrowing.
High borrowing that too at the time of high interest rate regime was detrimental for the proper day-to-day working of these OMCs hence government had to compensate OMCs.
