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13 September 2017
 |
| Oil Minister Dharmendra Pradhan (The Total Investment & Insurance Solutions) |
Oil
Minister Dharmendra Pradhan on Wednesday ruled out government intervention to
disrupt the daily revision in petrol and diesel prices despite Rs 7.3 per litre
spike in rates since July, saying the reform will continue.
He
however remained non-committal on cutting taxes to soften the blow of
relentless rise in prices since July 3, the government need to finance huge
infrastructure and social projects has to be balanced with consumer needs.
Terming
the criticism of spike in rates as unfair, he said the drop in prices for over
a fortnight after the daily price revision was introduced on June 16 has been
ignored and only "temporary" phenomenon of rising trend is being
highlighted.
India
relies on imports to meet 80 per cent of its needs and so domestic fuel rates
have been aligned to movement of equivalent product prices in the international
market since April 2002. The Total
Investment & Insurance Solutions
Previously
the rates were changed every fortnight but since June 16 they are revised
daily, Pradhan said, adding that the daily revision immediately passes on the
benefit of any reduction in international oil prices to consumers and avoids
sharp spikes by spreading them in small doses.
"The
government has no business to interfere in day to day operations of oil
companies. If at all, efficiency is only areas government will interfere to
improve operational efficiency of oil companies," he after meeting heads
of state- run firms.
He
was replying to questions from reporters if the government plans to stall the
daily price revision in view of the spike in rates.
Pradhan
said the global prices have risen due to factors like hurricane in the US and
there already are indications of "softening in the rates".
"As
a result of these hurricanes, 13 per cent of US refinery capacity was
shutdown," he said. The Total
Investment & Insurance Solutions
Asked
if the government will cut excise duty to soften the blow, he said: "That
is a call the finance ministry has to take but one thing is very clear - we
have to balance the developmental needs with consumer aspirations."
"We
have to fund massive highways and road development plans, railway modernisation
and expansion, rural sanitation, drinking water, primary healthcare and
education. Allocations on all these heads has gone up significantly. Where do
we get resources for these," he said.
The
government had between November 2014 and January 2016 raised excise duty on
petrol and diesel on nine occasions to take away gains arising from plummeting international
oil prices. In all, duty on petrol was hiked by Rs 11.77 per litre and that on
diesel by 13.47 a litre.
The
duty hike resulted in government's excise mop-up more than doubling to Rs
242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
The
windfall from the excise duty hikes helped the government bridge its budgetary
deficit. The Total Investment &
Insurance Solutions
He
said 42 per cent of excise collections are transferred to state government for
infrastructure and welfare programmes. Also, many state governments have
drastically increased VAT. The Total
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"It
is high time GST Council should consider bringing the petroleum products in the
ambit of GST," he said. The Total
Investment & Insurance Solutions
While
petrol prices have increased by Rs 7.32 to reach Rs 70.38 a litre in Delhi, the
highest since August 2014, diesel rates have risen by Rs 5.36 to Rs 58.72.
Pradhan
said it is the prices now are not the highest. "The all time high retail
selling price at Delhi of petrol was Rs 76.06 per litre on September 14,
2013," he said. The Total
Investment & Insurance Solutions
The
daily price revision, he said, is in the interest of consumers.
State-owned
oil companies in June dumped the 15-year old practice of revising rates on 1st
and 16th of every month and instead adopted a dynamic daily price revision to
instantly reflect changes in cost. Rates during the first fortnight dropped but
have been on the rise since July 3.
"Daily
revision in prices is good. When we started daily revisions on June 16, rates
dropped in the first fortnight. Thereafter it has increased mainly because of
rise in global oil prices," he said. The Total Investment & Insurance Solutions
Daily
revision, he said, results in any drop in international oil rates being passed
on to consumers immediately rather than having to wait for 15 days. In the
reverse scenario when international oil rates rise, pump prices are hiked by
few paise per day. The Total Investment
& Insurance Solutions
The
rate changes are being done on a transparent basis and city-wise prices are
available through SMS, he said, adding that the daily price change model best
reflects the happenings in the market. The Total Investment & Insurance Solutions
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