New Delhi, June 27: Union Finance Minister Pranab Mukherjee has urged state governments to reduce levies on diesel, kerosene and domestic LPG in line with the duty cuts undertaken by the Central government, so as to provide some relief to the common man.
In a letter to the Chief Ministers of different states, Mukherjee sought the co-operation of states in this regard.
“The Finance Minister has stated in his letter that even though the crude oil prices in the international market have been ruling at a very high level over the last six months, the government has so far maintained a firm control over the prices of diesel, kerosene and domestic LPG at the retail level to protect the common man,” a Finance Ministry statement said.
Mukherjee has written that this, however, has led to losses of the state-owned Oil Marketing Companies (OMCs) spiraling out of control with the OMCs losing more than Rs.450 crores per day due to the significant difference between India’s domestic prices and the international prices.
This concern has necessitated some revision in the administered prices.
Mukherjee has written that in raising the retail prices of diesel, LPG, and kerosene, the government has been conscious of the burden on the common man, and therefore, the price hike has been minimal.
Even though the Central Government has been under compulsion to maintain its fiscal and budgetary resource management targets and find additional resources to finance various welfare schemes, it has sacrificed its revenues from the oil sector on account of customs and excise duty in order to minimize the impact on the common man.
Mukherjee has noted that the Central Government will have to allocate significant resources as subsidies to the OMCs, so as to ensure their financial survival.
The Centre had hiked the price of diesel by three rupees a litre, kerosene by two rupees a litre and LPG by 50 rupees a cylinder on June 24.
Diesel is the most widely used transport fuel in India and powers tractors and irrigation pumps for farmers in one of the world’s biggest producers and consumers of grains and sugar.
Since the government agreed in principle to lift fuel costs a year ago, international crude prices have soared 39 percent, swelling the money spent on subsidising fuel prices to a country with 500 million people living in poverty.
Petrol prices, which largely affect more affluent Indians, have gone up about 23 percent since they were freed a year ago.
With inflation above nine percent and domestic fuel costs up nearly 13 percent on the year, raising prices would immediately hit the UPA coalition’s core voters among India’s poor, who live on less than the cost of two litres of diesel a day.
(With inputs from ANI)