Dharmendra Pradhan rules out regulation; blames hurricane in US for petrol price hike

BT Online        Last Updated: September 13, 2017  | 22:00 IST
With govt refusing to cut excise on petrol and diesel, Achhe Din for aam aadmi look far fetched

While every other product and service has been put under the Goods and Service Tax (GST), the exclusion of petrol and diesel from the new tax regime has left consumers helpless as fuel prices have hit a new high in three years.

Currently, the central government is not considering a cut in excise duty to bring down the skyrocketing prices of petrol and diesel. "The government cannot interfere in the day-to-day affairs of oil marketing companies," Oil Minister Dharmendra Pradhan said today.

"The government cannot change fuel pricing on a knee-jerk basis," Pradhan added. 

Tax on petrol and diesel makes up for around 50 per cent of the total fuel prices. The excise duty on petrol has gone up to Rs 21.48 today from Rs 9.48 in 2014 when Prime Minister Narendra Modi-led BJP government came to power. In Delhi, the VAT (Value-added Tax) levied by state government has gone up 27 per cent from 12.7 per cent earlier.

Since 2014, the excise duty on petrol and diesel was hiked by Rs 12 and Rs 13.47 per litre, a hike of 226% and 486% respectively over the May 2014 level.

The benefits of the slump in global crude price is yet to trickle down to the consumers in the country. The government may have boosted its own revenue collection but it is yet to pass on the gains on account of cheaper fuel prices to Indian consumers.

The duty hike resulted in government's excise mop-up more than doubling to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15. The windfall from the excise duty hikes has helped the government bridge its budgetary deficit.

Pradhan said the global prices have risen due to factors like hurricane in the US and there already are indications of "softening in the rates". "As a result of these hurricanes, 13 per cent of US refinery capacity was shutdown," Pradhan said.

Asked if the government will cut excise duty to soften the blow, he said: "That is a call the finance ministry has to take but one thing is very clear - we have to balance the developmental needs with consumer aspirations."

"We have to fund massive highways and road development plans, railway modernisation and expansion, rural sanitation, drinking water, primary healthcare and education. Allocations on all these heads has gone up significantly. Where do we get resources for these," he said.

If petroleum products are brought under the Goods and Service Tax, the total tax incidence on petrol and diesel is expected to come down to 28 per cent.

Earlier this month, Oil Minister Dharmendra Pradhan had ruled out cutting taxes on petrol and diesel to cushion the impact of rising international oil prices.


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