BJP president Amit Shah assured relief from the surging oil prices, saying government is taking the matter seriously. Since Sunday, petrol and diesel have seen a steep rise in price ending 19-day pre-Karnataka poll hiatus on revising fuel prices. Touching record highs, Petrol now costs Rs 76.87 per litre in Delhi and diesel costs Rs 68.08 per litre.
“Government is looking at it very seriously. Petroleum minister will be holding a meeting with the officials of oil firm tomorrow over this issue,” he said.
He also assured that relief formulae will be worked out soon in coming days.
“The prices have been increased as per a specific formulae. This has been discussed at the highest level in the government and in coming two to four days a formulae will be worked out”.
Facing “crisis situation” created by rising fuel prices, the government is likely to come out with “some steps” this week to deal with record high petrol and diesel rates, a senior official said on Tuesday.
“Rising fuel price is a crisis situation for government and it has to be handled with combination of steps. Finance ministry is consulting the petroleum ministry on rising crude prices,” the official said.
The government may not rely only on cutting excise duty, which makes up for a fourth of the retail selling price, the official said but did not elaborate. “We cannot rely on excise duty cut alone, although I am not ruling out a possibility of cutting excise duty. We have to be mindful of any fiscal impact of any excise cut on fuel,” he said.
In last nine days, petrol price has risen by Rs 2.24 a litre and diesel by Rs 2.15.
The rupee, which has fallen to 16-month low of 67.97 against the US dollar, is also playing a role in high oil bill, the government official admittedsaid.
The central government levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per litre 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.
In Delhi, VAT on petrol was Rs 15.84 a litre, and Rs 9.68 on diesel in April. Today it is Rs 16.34 on petrol and Rs 10.02 a litre on diesel. Every rupee cut in excise duty on petrol and diesel will result in a revenue loss of Rs 13,000 crore.
The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.
Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT. Just four of them — Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh — reduced rates while others including BJP-ruled ones ignored the call.
(With inputs from PTI)