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Govt planning holistic strategy to find long-term solution to fuel price hike, says Dharmendra Pradhan

In Delhi, VAT on petrol was Rs 15.84 a litre, and Rs 9.68 on diesel in April. Today it is Rs 16.64 on petrol and Rs 10.17 a litre on diesel.

twitter-logo PTI        Last Updated: May 28, 2018  | 19:01 IST
Govt planning holistic strategy to find long-term solution to fuel price hike, says Dharmendra Pradhan
PC: India Today

The government is planning a "holistic strategy" to find a long-term solution to the increase in petrol and diesel prices triggered by a spurt in international rates, Oil Minister Dharmendra Pradhan said today. However, he did not share any details of the strategy.

Petrol and diesel prices were hiked today for the 15th day in a row, taking the cumulative increase this month to the highest in at least five years. Petrol price has been hiked by Rs 3.64 a litre and diesel by Rs 3.24 in Delhi since state-owned oil firms ended a 19-day pre-Karnataka poll hiatus to resume daily price revision on May 14. In June last year, the government did away with a 15-year old practice of revising rates every fortnight and introduced daily revisions which worked well except periods immediately preceding an election.

"I have already categorically stated (on) this issue several times. The present oil price hike is due to three main factors. Hike in the international price of crude, fluctuation in the dollar and Indian currency ratio and some of the tax issues are also there," he told reporters here.

The central government levies Rs 19.48 excise duty on a litre of petrol and Rs 15.33 on diesel. State sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the state when rates move up.

In Delhi, VAT on petrol was Rs 15.84 a litre, and Rs 9.68 on diesel in April. Today it is Rs 16.64 on petrol and Rs 10.17 a litre on diesel.

Petrol in Delhi now costs Rs 78.27 a litre and diesel is priced at Rs 69.17. Delhi has the lowest fuel price among all metros and most state capital due to lower incidence of local sales tax or VAT.

"For a long-term solution, Government of India is planning for a holistic strategy... bringing petroleum products within the ambit of GST is one among them," he said. "We are sensitive let's see how things are unfolding".

Pradhan was replying to questions on when consumers can expect relief from rising fuel prices. Neither did he elaborate on the solution and the holistic strategy nor did he say if the government is planning a cut in excise duty to provide relief to consumers.

The government had raised excise duty on petrol by Rs 11.77 a lire and that on diesel by 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances as global oil prices fell, but also cut the tax just once in October last year by Rs 2 a litre.

There was a 19-day freeze in revising rates before Karnataka went to polls, and since the time the hiatus ended on May 14, rates have gone up by on every single day - petrol price was today raised by 15 paise a litre and diesel by 12 paise, according to a price notification issued by oil marketing companies.

Last week, after a weekly meeting of the Union Cabinet Law Minister Ravi Shankar Prasad had stated that the government is working on a long-term solution to address the volatility and frequent revisions in rates.

"The government is keen that instead of having an ad hoc measure, it may be desirable to have a long-term view which addresses not only the volatility but also takes care of the unnecessary ambiguity arising out of frequent ups and downs. That process is underway," he had said.

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