The Hindu Business Line : Maharashtra eases fuel rate hike

The price increases of Rs 4 on petrol and Rs 2 on diesel announced on Monday will be eased by Re 1 and 75 paise respectively in Maharashtra as it has decided to forgo the increased sales tax from the hikes, said Mr Murli Deora, Minister for Petroleum and Natural Gas.

The Centre has appealed to all State Governments to consider forgoing the increased revenues that the price hikes will yield them, Mr Deora told newspersons today.

There is no question of a rollback on the price hikes, said Mr Deora, in response to questions.

The Chief Minister of Maharashtra, Mr Vilasrao Deshmukh, has agreed to adjust the sales tax on these products so that revenue neutrality is maintained, said Mr M.S. Srinivasan, Secretary of the Ministry of Petroleum.

Maharashtra's sales tax on these products is among the highest in the country; its levy on petroleum is 29 per cent plus a surcharge of Re 1 a litre; on diesel it is 31 per cent plus a surchage of Re 1.

The price hikes will give oil marketing companies relief of Rs 9,300 crore; at the weighted all-India average of 27 per cent sales tax, the States' additional income will be Rs 2,600 crore or so, Mr Srinivasan added.

It was felt that the States could easily do without this increased income, considering that their total rakings from sales tax on petroleum products amounted to Rs 42,000 crore, he said.

Oil companies can, without approval from Government, mark up their prices once oil prices cross $70 a barrel internationally, according to him. (Currently India's crude basket is at $67.5 a barrel).

For every $1 increase, oil companies can increase the price of petrol by 39 paise a litre, 30 paise (diesel), 37 paise (kerosene), and LPG by 67 paise a cylinder.

Our Chennai Bureau reports: Asked if Tamil Nadu would consider reducing sales tax on petrol and diesel, the Chief Minister, Mr M. Karunanidhi, ruled out the possibility stating that if the tax were to be reduced, fares in public transport buses would have to be increased. (Tamil Nadu levies 25 per cent tax on diesel and 30 per cent on petrol).

To make sure that kerosene reaches the targeted, below-the poverty line families and is not diverted elsewhere, the Government has embarked on a scheme in a non-computerised district in the country which involves the issue of smart cards and of inspection and checking. Within six months, this will be rolled out in the rest of the country, said Mr Srinivasan.

The diversion rate is now around 40 per cent, he added.

There is also discussion on whether kerosene could be sold in pouches; but to package a non-food item in pouches required special permission from the Environment Ministry, according to him.

The Ministry appeared to have gone into mission mode to convince the country - in the face of political opposition and countrywide protests - that the hikes were necessary.

Mr Srinivasan repeatedly said that if Indian oil companies had to bear losses indefinitely, then their ability to create capacity would be impaired: this would put the country's energy security at risk, leading ultimately to poorer diplomatic manoeuvrability and greater vulnerability internationally, and a threat to the economy too.

ONGC investment plans

ONGC, along with other upstream companies such as GAIL and Oil India, has to take a hit of Rs 24,000 crore as part of the package to contain under-recoveries in the oil sector.

As a result, its overseas investment plans under which $7 billion was to be invested over three years, might have to be scaled down by around $1-1.5 billion. Later, he added, it may have to be scaled down by up to $2 billion.

More Stories on : Petroleum | Taxation | Maharashtra | Tamil Nadu

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Monsoon weakens — Dry phase likely to continue for 8-10 days

Corporates log on to Net banking

Cheaper food, textile items control inflation

Maharashtra eases fuel rate hike

What the world pays for petrol

Panel to study textile ind contract employment offer

L&T Infotech aims to be $1-b co

Pink slip fears come back to haunt techies

Cotton-growing States unite against Monsanto

Pricing of Bt cotton should be market-driven, says Monsanto

Markets recover sharply

Diversified equity funds have rough ride

ICICI Bank raises lending rates

BSE poised to launch trading in corporate bonds