Economy

Government Looking At Short-Term, Long-Term Solutions On Petrol, Diesel Prices: Oil Minister

Government Looking At Short-Term, Long-Term Solutions On Petrol, Diesel Prices: Oil Minister

Oil and gas sector analysts have over the past week said fuel prices will go up by an additional Rs 4 per litre as the Oil Marketing Companies (OMCs) try to recover their marketing margins, which came under pressure when OMCs collectively initiated a price freeze for 19 straight days before the Karnataka elections.

In tandem with petrol prices, diesel prices in Delhi, Kolkata, Mumbai and Chennai also rose to fresh record highs of Rs 68.75, Rs 71.30, Rs 73.20 and Rs 72.58 per litre, respectively. China on 1 April 2006 began levying the special upstream profit tax on domestic oil producers to redistribute and allocate the windfall income enjoyed by the oil companies and subsidise disadvantaged industry and social groups that are most affected by soaring crude oil prices.

The surge in fuel prices is mainly attributed to the rise in crude oil price, depreciation of rupee against the United States dollar and the high excise duty levied on petrol and diesel.

"The outlook for fuel prices in the weeks ahead is not good, with another penny a litre expected to be added".

Pradhan asked the Odisha Government to cut the Value Added Tax (VAT) on petrol and diesel to provide relief to the people.

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Crude oil prices are likely to remain elevated at $75 per barrel in FY19, on the back of production cuts by Opec, sluggish response of shale and continuing gradual global growth recovery, said a Yes Bank report last week.

"When crude prices were falling from November 2014, the repeated increase of duty was a strategic error of the government". Though UPA lost elections on several other issues in 2014, its inability to control fuel prices played a big role.

However, Pradhan doesn't see this as a potential solution as the central government had reduced the excise duty on fuel by Rs. 2 per litre only recently in the wake of poor. The Centre's excise tax is much more than the state's tax.

On Mr Pradhan's suggestions to include petroleum products under GST, Behera said, "All the state governments will take a decision in regard to the proposal of including petroleum products under GST".

The ruling Biju Janata Dal (BJD) has chose to stage demonstrations across Odisha for three days against the steep rise in fuel prices.


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