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Rollback of petro prices ruled out
Decrease ST on petrol, govt tells states
Manoj Kumar
Tribune News Service

New Delhi, June 7
Ruling out any rollback of hike in petrol and diesel prices at least for the time-being, the UPA government, headed by Prime Minister Manmohan Singh, seems to be heading towards a confrontation with the Congress itself besides the Left parties and BJP-led NDA opposition.

After meeting with Congress president Sonia Gandhi yesterday, while Petroleum Minister Murli Deora had hinted at marginal rollback of hike in petrol and diesel prices, today he ruled out any rollback after meeting with Prime Minister.

“We will face it”, the Prime Minister reportedly told Mr Deora. The Prime Minister’s remarks were a pointer to the stark necessity of rolling back hike in petrol and diesel prices, after the Congress had publicly appealed to the government to review price hike.

“No rollback is being discussed or decided,” Mr Deora told reporters after a meeting with the Chief Executives of oil companies here.

This is perhaps the first time that Prime Minister Manmohan Singh is reportedly taking a tough stand ignoring the Congress president, who has repeatedly emphasised that government should not put undue burden on common man.

He blamed the high tax rates in the states, including Left-ruled West Bengal, and BJP-ruled MP and Rajasthan besides Andhra Pradesh, Maharashtra and Punjab, ruled by Congress, for high rates of petrol and diesel.

The Petroleum Ministry said high sales tax on petrol that is as high as 34 per cent in Andhra Pradesh, 32.75 per cent in Mumbai, 30 per cent in Punjab, Tamil Nadu and 27.78 per cent in West Bengal has led to present prices of oil products.

The industry experts said oil companies, which have shown marginal fall in their net profits despite spurt in crude oil prices, would have to adjust just Rs 733 crore in their balance sheets if petrol prices are lowered by Re 1 a litre.

Meanwhile, BJP-led NDA Opposition held protests in the National Capital against unprecedented hike in petrol and diesel prices by Rs 4 and Rs 2 a litre, respectively.

They claimed that it would have a cascading impact on economy and would lead to inflation. The Left parties have also announced nation-wide protests against the hike in fuel prices. The Congress has also appealed to the government to review the prices.

He asked the state governments to bring down state taxes to provide relief to the consumers.

“Had the states agreed to charge even the highest ever rate of 12.5 per cent under VAT, there would have been no need to burden the consumers with additional Rs 4 a litre on petrol,” said a senior official in the Petroleum Ministry.

He said the increased difference between petrol and diesel from Rs 13 a litre to Rs 15 a litre and around Rs 40 a litre between petrol and kerosene would further encourage adulteration of oil products.

According to government estimates, the adulteration is already amounting to over Rs 30,000 crore annually, besides leading damages of vehicles worth thousands of crores due to adulterated fuel annually.

Prof C. Rangarajan, who headed the Rangrajan committee constituted by Prime Minister Manmohan Singh to suggest measures to deal with the rising international crude oil prices, also said government should have also implemented committee recommendations on LPG and kerosene prices.

The committee had recommended increasing the LPG prices by Rs 75 a cylinder and marginal increase in kerosene, besides targeting the subsidised kerosene only for below poverty line (BPL) families.

The Petroleum Ministry claimed that government had only burdened the consumers by about Rs 9300 crore annually, while taking the major burden itself by committing to issue interest-bearing oil bonds worth Rs 28,300 crore.

However, the industry experts said, government should have asked the oil companies, especially private sector refineries like Reliance to share burden, besides encouraging the export of finished oil products to increase their profitability. 

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