Petrol and diesel prices will go up by Rs 2.67 a litre and Rs 2.58 per litre, respectively, after Finance Minister Pranab Mukherjee on Friday raised customs and excise duties on the two, virtually putting the Kirit Parikh Committee report on fuel price in cold storage.
Customs duty on petrol and diesel were hiked to 7.5 per cent from 2.5 per cent while excise duty was raised by Re one a litre to Rs 14.35 and Rs 4.60 per litre on non-branded (normal) petrol and diesel respectively.
The incidence of customs and excise duty would result in petrol prices going up by Rs 2.67 a litre in Delhi and diesel by Rs 2.58 per litre with effect from midnight tonight.
Petrol, in Delhi currently costs Rs 44.72 a litre and diesel Rs 32.92 per litre.
Mukherjee also imposed 5 per cent import duty on crude (currently nil), a move that would impact refiners like Reliance Industries and Essar Oil with their input cost going up.
Reliance Industries' 33 million tons a year refinery catering to domestic market would alone have to bear Rs 5,100 crore because of higher rates. Its other 29 million tons unit is only for exports and does not pay customs duty.
The rates hike virtually put the Parikh report on fuel pricing reforms in cold storage as implementing the expert group report on freeing petrol and diesel prices would mean a further Rs 4.94 a litre increase in petrol and Rs 3.20 per litre hike in diesel rates.
"In the wake of spiralling petroleum prices, government provided full exemption from basic custom duty to crude petroleum and proportionately reduced the basic duty on refined petroleum products in June 2008," Mukherjee said.
"Compared to the international price of the Indian crude basket of USD 112 per barrel at the time, the prices are much softer at present," he said presenting the Budget for 2010-11.
On Parikh Committee report, which besides suggesting freeing of petrol and diesel prices recommended steep Rs 100 per cylinder hike in domestic LPG and Rs 6 a litre increase in kerosene rates, he said: "Decisions on these recommendations will be taken by y colleague, the Minister of Petroleum and Natural Gas (Murli Deora), in due course."
If the customs and excise duty hikes are not passed on to consumers, the revenue loss of state-owned oil firms will rise by Rs 17,240 crore over and above the Rs 45,571 crore revenue loss estimated for the full year on selling petrol, diesel, domestic LPG and kerosene below cost.
Of the Rs 45,571 crore revenue loss this fiscal, the government was to bear Rs 31,574 crore loss arising on LPG and kerosene but Mukherjee has given only Rs 12,000 crore.
Though, he said he would like to do away with the practice of giving oil bonds as compensation in favour of cash from budget, he allocated just Rs 3,108 crore for cooking fuel subsidy for next fiscal. PTI
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