Tuesday October 9, 04:25 AM
Centre may cut duties to avoid petrol price hike
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By Anupama Airy
Concerned about the political implications of a possible rise in the retail price of petroleum products at this time, Prime Minister Manmohan Singh on Monday met finance minister P Chidambaram and petroleum minister Murli Deora. On the agenda: a duty rejig in the petroleum sector. Sources said the government is weighing the possibility of an excise duty reduction of up to Rs 2 a litre each on petrol and diesel. This would lead to a revenue loss of up to Rs 14,000 crore. The petroleum ministry proposed that this revenue loss be recouped by increasing taxes on other commodities. Taxes currently constitute 54% and 32% of the retail price of petrol and diesel, respectively, in Delhi. "I have discussed that (oil bonds) with Chidambaram and he has been very kind. We are trying to avoid an increase in the fuel prices. In the absence of a hike, the concern is to evolve ways to meet under-recoveries of OMCs, which will go to Rs 60,000 crore," Murli Deora said, adding the matter would be taken up in Cabinet this week. Sources also revealed that while Deora pressed for the issue of more oil bonds to shore up the bottomlines of public sector IOL, BPCL and HPCL, Chidambaram was not in favour of this. Deora is understood to have pointed out that the only alternative was to cut taxes, since it was not possible to hike retail prices of petrol and diesel with the prospect of polls looming large.
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