Dec 25, 1999|
Diesel hike off, import duty reduction on crude sought
The petroleum ministry has requested the finance ministry for a reduction in the duty of crude oil. This will help it to balance its accounts and avoid raising the prices of diesel once again. As per the cabinet decision in September 1997 the domestic prices have to be aligned with international prices every 60 days.
The government apparently seems to be in no mood to hike diesel prices after the 40% hike in October. Hence, the request from the petroleum ministry. The petroleum minister Ram Naik has been quoted as saying "If I have an assurance from the finance minister I can adjust my accounts."
The duty reduction could set off the increase in the basic price of the fuel. The retail price of diesel (Rs. 13.91 per litre in New Delhi) is inclusive of the 30% customs duty, 16% excise and sales tax over the ex-storage point over Rs.9.63 a litre. The import duty on crude is 20% and a 5% duty reduction would compensate for an increase in the basic price of diesel.
The duty reduction, if it were to come through is a positive step. Any further diesel price hike would have lead to further increase in freight costs for the industry implying a further increase in inflation.
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