Petrol, diesel prices may fall
New Delhi, August 18
The decision is likely to result in a revenue loss of Rs 2500 crore in the remaining part of the current year. But the sources said, the oil companies may partially pass on the benefits to the customers by reducing petrol and diesel prices by Rs 1 to Rs 1.50 per litre soon.
The Finance Minister made the announcement in Parliament. Later talking to the reporters, he said: “We have decided to make reduction in customs and excise duties and I hope that the international crude price will decline.”
He hoped that the combined effect of duty cuts, rise in import prices of crude and the selling prices would result in certain increase in revenue.
The customs duty on petrol and diesel would be 15 per cent as against the current level of 20 per cent. Import duty on kerosene (for PDS) and LPG have also been reduced to 5 per cent each from 10 per cent. Excise duty on petrol and diesel has been reduced by 3 per cent and on kerosene by 4 per cent to 12 per cent.
Oil industry experts said 5 per cent cut in customs duty would result in nearly a rupee decrease in prices of petrol and diesel per litre. Similarly, the cut in excise duty by 3 per cent each on petrol and diesel would also result in a drop in prices of both products.
The sources in the Petroleum Ministry said the government was quite worried that it would draw a flak from the Opposition and its allies over further rise in inflation. So it is likely to press upon the oil companies to reduce petrol and diesel prices marginally.
They said despite the loss in revenue, the government is likely to get higher revenue under the petroleum products as the prices had increased sharply since the beginning of this year.
The cut in customs duty would not result in major revenue loss because the country is not importing petrol and diesel. However, around 15 per cent of the total LPG consumed is imported by oil marketing companies to meet the demand.
The under-recoveries of the oil marketing companies are expected to decline sharply as the landed cost for determining the retail prices includes the component of customs duty.