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| Duty revision to fuel prices |
| BS Reporter / Feb 27, 2010, 00:27 IST |
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Customs duty on crude oil to add Rs 16,800 cr to govt kitty.
While shying away from implementing the recommendations of the Kirit Parikh committee on keeping petrol and diesel prices at market rates, the government has restored a 5 per cent Customs duty on crude oil import and increased excise duty on petrol and diesel by Re 1 a litre. As a result, petrol price in Delhi will go up from Rs 44.72 to Rs 47.43 a litre and diesel to Rs 35.47 per litre, effective from Friday night.
The restoration of Customs duty on crude would add Rs 16,800 crore to the government kitty, Finance Secretary Ashok Chawla said. While the overall increase in excise duty from 8 per cent to 10 per cent would mean an increase in the government’s revenue by Rs 14,000 crore, the excise duty increase on petrol and diesel alone will lead to additional revenue of Rs 9,300 crore.
The Budget estimate of the government’s earnings from basic and special excise duty on petrol and diesel for 2010-11 is Rs 87,722 crore, compared to a revised estimate of Rs 62,841 crore in 2009-10.
“In the wake of spiraling petroleum prices, the government provided full exemption from basic Customs duty to crude petroleum and proportionately reduced the basic duty on refined petroleum products in June 2008. Compared to the international price of the Indian crude basket of $112 at that time, the prices are much softer at present. In view of the pressing need for returning to fiscal consolidation, I propose to restore the basic duty of 5 per cent on crude petroleum, 7.5 per cent on diesel and petrol and 10 per cent on other refined products. I also propose to enhance the central excise duty on petrol and diesel by Re 1 per litre,” Finance Minister Pranab Mukerjee said while presenting the Union Budget on Friday.
In order to keep a delta between crude and finished products, the Customs duty on petrol and diesel is being increased from 5 per cent to 7.5 per cent. The Customs duty on other specified petroleum products such as naptha and bitumen have been doubled to 10 per cent. While being revenue-neutral for the oil-marketing companies (OMCs), the restoration of the Customs duty on crude will bring an additional Rs 370 crore to ONGC, the country’s largest oil explorer.
Mukherjee added that a decision on the recommendations of the Parikh panel would be taken in due course. “Decisions on these recommendations will be taken by my colleague, the Minister of Petroleum and Natural Gas (Murli Deora), in due course”, he said.
The committee has suggested market-linked prices for petrol and diesel. However, only a partial increase of Rs 6 a litre for kerosene and Rs 100 on every cylinder of LPG has been proposed. It has also proposed a reduction in kerosene sold through ration cards by 20 per cent.
The government has also estimated an earning of Rs 10,025 crore from royalty, profit petroleum and petroleum exploration licence during 2010-11, up marginally from revised estimates of Rs 9,773 crore in 2009-10.
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