Rangarajan Committee and Nayak Committee (Download PDF)


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Rangarajan Committee Purpose: Public Sector Disinvestment. Recommendations of the Rangarajan Committee: Adopting the trade parity principle for pricing of petrol and diesel, based on a weighted average of the import parity and the export parity prices in the ratio of 80: 20. This principle of trade parity pricing will apply for the refinery gate price as well as for determining the retail price.

  • Terminating the principle of freight equalisation for calculating the price of petrol and diesel at different locations.
  • Government should keep themselves at arm’s length from the actual price setting of petrol and diesel, and allow the oil marketing companies the flexibility to fix the actual retail price subject to the indicative trade price ceiling.
  • Reduce the customs duty on petrol and diesel to 7.5 per cent.
  • The Committee has mentioned that an upward adjustment in the prices of petrol and diesel to the extent of Rs. 0.31/litre and Rs. 1.2/litre (Mumbai retail prices), respectively, is warranted if its recommendations are accepted. Else, the price increase required would be Rs. 0.51/litre on petrol and Rs. 2.68/litre on diesel (Mumbai prices). It has further stated that if the government were to decide not to increase the prices of these products, then it should bear the burden caused by their increasing international prices.
  • Excise levies on petrol and diesel to make specific.
  • Subsid ized kerosene to be restricted to below poverty line (BPL) families.
  • Adjust the price of domestic LPG by Rs. 75/cylinder and then progressively increase it further in line with the international price.
  • Government to determine the quantum of subsidy to borne by upstream companies (ONGC/OIL) up-front and collect it by suitably adjusting the rate of cess.

Nayak Committee

Purpose: Credit to SSS Bank

Recommendations of the Nayak Committee

  • Scrapping and removal of Bank Nationalization Acts, SBI Act and SBI (Subsidiary Banks) Act
  • Conversion of PSBs into Companies as per the Companies Act
  • Formation of a Bank Investment Company/BIC under the Companies Act; transfer of shares by the central government in PSBs to the BIC
  • BIC in turn would have over the controlling power to boards of PSBs
  • Government will only control earning return on investment
  • Fair return on investment to the Central government would be the responsibility of BIC
  • Appointments of CEOs, Inside Directors and top Executives of PSBs would be the responsibility of the Bank Boards Bureau constituting three serving or retired bank chairman and the government would not be involved in this decision in any way
  • Nayak committee also recommends proportionate voting rights to all shareholders and reduction of governmental shareholding to 40%.

- Published/Last Modified on: December 22, 2016

Committees/Govt. Bodies

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