Rising fuel rates: Govt concerned about petrol, diesel price pinch, says oil minister Dharmendra Pradhan

New Delhi: Amid the unabated rise in petrol and diesel prices, Oil Minister Dharmendra Pradhan on Thursday said the government is concerned about the pinch to consumers but a balance has to be struck between their interest and fiscal needs.

He was, however, non-committal on the government cutting excise duty to soften the blow of rising international crude oil prices that have pushed petrol prices to a 55-month high of Rs 74.63 a litre and diesel to a new high of Rs 65.93. "We are concerned about pinch... We are concerned about the price rise," he told reporters on sidelines of an industry event.

Declining to say as to what the central government is doing to address the issue, Pradhan said states should cut the sales tax or VAT on petrol and diesel to ease the burden on consumers.

Asked if his ministry has sought a reduction in excise duty, he said working on a "piecemeal" solution will not help. "Let's see things more holistically. We have to manage the fiscal balance and at the same time, we have to also protect consumer interest," he said adding that the government is collectively addressing the issue. Oil prices are "under our close watch," he said.

Earlier this week, a senior finance ministry official stated that a cut in excise duty was not advisable if the government was to stick to the path of reducing budgetary deficit.

File image of petroleum minister Dharmendra Pradhan. PIB.

File image of petroleum minister Dharmendra Pradhan. PIB.

The government is targeting reducing the fiscal deficit to 3.3 percent of the gross domestic product (GDP) in the current fiscal, from 3.5 percent in the previous fiscal.

"Every rupee cut of excise on fuel will result in a loss of Rs 13,000 crore to the government," the official had said. "Fiscal considerations are far higher than one or two rupee price impact on consumers. [A] one or two rupee increase doesn't impact inflation," he had said.

The central government levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per a litre on diesel. State sales tax or VAT vary from state to state. In Delhi, the VAT on petrol is Rs 15.84, and on diesel it is Rs 9.68 a litre.

Pradhan blamed geopolitical reasons for the spike in international oil prices, which is triggering increases in the retail selling price of petrol and diesel. Listing the reasons, he said oil cartel OPEC has agreed to continue with its output squeeze while the situation in Venezeula, Iran and Syria were contributing to the spike.

State-owned oil firms, which, since June last year, have been revising auto fuel prices daily, left prices unchanged for a second day on Thursday. This after petrol prices were hiked by 72 paisa a litre over the past 10 days and diesel by a rupee.

Petrol in the national capital now costs Rs 74.63 a litre, the highest since 14 September, 2013, when rates had hit Rs 76.06. Diesel price stand at Rs 65.93, which is the highest ever.

India has the highest retail prices of petrol and diesel among South Asian nations as taxes account for half of the pump rates. The government raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.

Subsequent to that excise duty reduction, the Centre had asked states to lower VAT, but just four of them - Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh - reduced rates while others including BJP-ruled states ignored the call.

In all, the duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months, helping the government mop up Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.


Updated Date: Apr 26, 2018 20:35 PM

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