Centre working on long-term solution on fuel price hike: Pradhan

  • Centre working on long-term solution on fuel price hike: Pradhan

Centre working on long-term solution on fuel price hike: Pradhan

The price Brent crude oil, however, has declined around $3 per barrel in the last two days, which raises hopes of easing fuel prices in the country.

The revenues so collected would be used to pay fuel retailers so that they absorb spikes beyond the threshold levels, they said. The government needs to provide relief to consumers, complaining not only of higher crude prices but also significantly higher taxes. A similar tax was considered in 2008 when oil prices were on the rise but the idea was dropped after stiff opposition from private sector firms like Cairn India.

"The reasons that the union oil minister is giving is not justified".

Supermarkets have increased the price of petrol and diesel every day since the end of March, a new analysis shows.

However, finance ministry officials contended that "from an economist's standpoint, a windfall tax is seen as non-distortionary and pro-poor".

In such a precarious scenario, where inflationary trends may rear its head at any time, Pradhan's attempts at restoring normalcy has been rather hollow even if the call for including petrol and diesel in GST is not for him to make.

Today, oil minister Dharmendra Pradhan is expected to hold meetings with major oil marketing companies and there is a high possibility that the government will ask IOCL and Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) to hold back any hikes for a temporary period till another alternative is envisaged.

It has also worked out the math of the amount of taxes that are shared with states as part of the devolution formula and what goes to the exchequer. In October past year, the Centre cut excise duty by Rs 2.

In this situation, some analysts believe it would be wise for the government to take more tax action, but in another direction: reducing value-added tax in Indian states and the national excise duty would be another way of tackling the problem, Indian media reported this week citing some of these analysts. States may not be willing to allow that because taxes on fuel account for 11% of their overall tax revenue.