Amid mounting public outcry over steep fuel price hike, BJP chief Amit Shah on Tuesday said the issue would be resolved soon.
Hectic meetings throughout the day marked the government's efforts to get a handle on the price hike as petroleum and Natural Gas Minister Dharmendra Pradhan met officials of the Oil Marketing Companies (OMCs) while the Finance Ministry deliberated whether to cut excise duty to roll back the prices.
Addressing the furore over fuel price hike, Shah said that the government officials were taking the issue of fuel price hike seriously. "The government is taking the matter of oil prices seriously. Petroleum minister will have a meeting with the officials of the oil companies. We are trying to work out a formula to reduce the prices in the next three to four days." The BJP president asserted that the Modi regime would seek people's mandate in 2019 after covering all villages under seven flagship schemes
All India Petroleum Dealers Association president Ajay Bansal said the government can only control the rising fuel price by reducing VAT of states and central taxes. "Fuel prices are directly linked to crude oil. The Organization of the Petroleum Exporting Countries have reduced supplies. We don't have any way to bring down the price. We can only reduce VAT of state taxes and central taxes, that is the only way to reduce the price," said Bansal.
When compared to 2013, the central tax on diesel has increased from 3.56 percent to 15.33, while it has more than doubled on petrol from 9.48 percent. The Centre earned 2.7 lakh crore from taxes and duties on petroleum products in 2016-17, which was 1.3 lakh crore in 2014-15.
The crude oil rate (per barrel) was Rs 5,747 in 2013, which is Rs 4,245 in 2018. Moreover, the Dollar exchange has risen from 54.29 in 2013 to 65.13 in 2018.
A senior official said the government might not rely only on cutting excise duty, which made up a fourth of the retail selling price. "Rising fuel price is a crisis situation for the government and it has to be handled with a combination of steps. The Finance Ministry is consulting the Petroleum Ministry on rising crude prices." He refused to elaborate on the discussions.
The official said the government had to be mindful of its fiscal maths while dealing with the option of cutting excise duty. "We cannot rely on excise duty cut alone, although I am not ruling out a possibility of cutting excise duty. We have to be mindful of any fiscal impact of any excise cut on fuel," the official said.
Both the Centre and states, whose VAT makes up for 20-35 per cent of the retail cost and have gained from the rising oil prices, need to take measures, he said. The rupee, which has fallen to a 16-month low of 67.97 against the US dollar, was also playing a role in high oil bill, he said. Every rupee cut in excise duty on petrol and diesel will result in a revenue loss of Rs 13,000 crore.
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