NEW DELHI: The government is working on a “long-term solution” to deal with volatility in global crude prices and frequent revisions in retail rates of petrol and diesel, law and IT minister
Ravi Shankar Prasad said after the Cabinet’s meeting on Wednesday without outlining the options being considered.
Prasad’s statement came as an anti-climax because statements by
BJP chief
Amit Shah and oil minister Dharmendra Pradhan had raised anticipation of a cut in excise duty, though they had not specifically said so. No wonder Prasad’s statement failed to cut much ice with consumers or the opposition parties as state-run fuel retailers, who had frozen retail rates for 19 days till the
Karnataka election, raised pumps prices for the 10th straight day since they resumed the revisions on May 14. Petrol price rose to Rs 76.17 per litre and diesel to Rs 68.34 in Delhi, the reference market. Prices in other cities, including Mumbai, are much higher due to the higher incidence of state and local taxes.
It seems the government wants to wait and watch the oil prices some more. But if projections by various investment banks and trade analysts are anything to go by, it may have no other option but to cut excise duty. Other options such as changing the pricing formula to revise customs duty on petrol and diesel, even though they are not imported, at best will be the topping. Dumping daily revisions will bring the government’s reforms agenda into question.
HPCL chairman M K Surana said going back to a cost-plus method of calculating prices against the current system of pricing fuel daily at a 15-day moving average of benchmark product prices would be a retrograde move. “The long-term solution is bringing petroleum products under the GST regime.”
Pradhan has been blaming “the unilateral
OPEC decision to cut production, fall in Venezuela’s output due to political instability and the prospect of US sanctions against Iran” for runaway pump prices. No doubt, these factors have pushed up benchmark crude prices to $80/barrel and the impact has been amplified by a falling rupee.
But real objective behind the blame-game seems to be to shift public gaze away from he fact that it had raised excise duty9 times between November 2014 and January 2016 when oil prices practically went into a free fall.