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T
he Government bowed
down to the inevitable and, ignoring protests from political
parties, decided to hike the prices of petrol and diesel. It was a
two-pronged strategy to counter the impact of soaring crude prices
in the international oil market since March this year. One, it
passed on part of the burden to the consumers by hiking retail
prices of petrol by around Rs. 2.50 a litre and that of diesel by
about Rs. 1.50 a litre. Next, it announced a cut in the excise duty
on these products by two per cent, basically to limit the increase
in consumer prices. However, despite this cut in the excise duty by
two per cent, the exchequer will still be a net gainer in terms of
revenue receipts, thanks to financial engineering. Significantly,
from now onwards, the oil companies have been given the freedom to
revise prices of petroleum products every 15 days based on the
movement of crude prices in the international oil market. On the
other hand, the Government will review the situation every three
months so as to carry out any excise duty adjustments on these two
fuels. Announcing the strategy of the price hike and excise duty cut
to combat the effect of the hardening global oil market, Petroleum
Minister Ram Naik said the oil companies would also be compensated
for the Rs. 2,000 crore, which they have lost on account of selling
these products below cost in the
last two months. This
compensation would either be in the form of oil bonds or cash, the
modalities for which will have to be worked out by the Finance and
Petroleum ministries, Naik said. The excise duty on petrol has been
lowered from 32 per cent to 30 per cent and on diesel from 16 to 14
per cent for the next three months. "Excise duty revisions, if
needed, will now be carried out in September", the Minister pointed
out. The per litre revenue earning from petrol will go up from Rs.
3.53 to Rs. 3.82 resulting in a net revenue gain of 29 paise. This
will result in an additional realisation of Rs. 72 crore in the next
three months. The Government will net an additional Rs. 12 crore
from diesel in the next three months. Besides, the exchequer has
already garnered an additional Rs. 257 crore from customs duty on
crude imports. India imports 84 million tonnes of crude every year
and the prices of crude in the international market have peaked by $
5 per barrel resulting in extra revenue to the Government. |
