Even as the oil marketing companies raised fuel prices for the 10th consecutive day, the Government had no firm answer to the problem. All it said on Wednesday was that a ‘long term solution’ was being worked out, but kept mum on the details.

Petrol prices have gone up by ₹2.54 a litre and diesel by ₹2.41 a litre since May 14. With international prices of crude and petrol-diesel still rising, any relief will be possible only through Government intervention However, the Government has ruled out any ad hoc solution. “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,” Union Law Minister Ravi Shankar Prasad told reporters here on Wednesday.

The Minister refused to elaborate either on the measures being considered or the possibility of a duty reduction. On the question of excise duty, he said proceeds from such taxes are used for the country’s development, including building of highways, digital infrastructure, electricity to villages, hospitals and education. So “tax on fuel is linked with developmental issues. We understand that there is a compelling need for a long-term solution, structured solution (to deal with the present situation),” he said.

There are indications that a cut in excise duty, combined with States being asked to reduce VAT, is on the cards. The Central government levies ₹19.48 excise duty on a litre of petrol and ₹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.

There was wide spread speculation that the Union Cabinet might discuss and decide on some relief to the consumer. It is not known what transpired at the meeting and Prasad too did not clarify on if the matter was discussed or not. All he said was that the issue of frequent hike in fuel price is a matter of debate and concern. “The government is involved in this whole process, including the concern (about rise in prices) and also the uncertainty,” he said.

Chidambaram’s tweet

Former Union Finance Minister and senior Congress leader P Chidambaram, in a series of tweets said the fall in international oil prices between 2014 and early 2016 helped the government save ₹15 per litre but the government put an additional ₹10 on every litre of fuel. “Bonanza to Central government is ₹25 on every litre of petrol. This money rightfully belongs to the average consumer. It is possible to cut up to ₹25 per litre, but the government will not. They will cheat the people by cutting price by ₹1 or 2 per litre of petrol,” he said.

Commenting on the tweets Prasad said that he does not comment on the Congress leader’s tweets because ever since his party went out of power, he had become active on twitter. “But I want to tell my media friends that they should tweet to Chidambaram and ask if his mathematics was so strong then how did his government go out of power,” he said.

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