The finance minister, official sources said, will be writing letters to the state CMs to explain the rationale of the price hike and the need to reduce sales tax on cooking gas to give some relief to the aam admi.
Amid widespread protests over the hike in prices of cooking gas and diesel, finance minister Pranab Mukherjee will soon write to state chief ministers to reduce state levies on at least LPG to reduce the impact of the price hike on the common man.
The finance minister, official sources said, will be writing letters to the state CMs to explain the rationale of the price hike and the need to reduce sales tax on cooking gas to give some relief to the aam admi.
While raising the prices of diesel, LPG and kerosene, the central government also decided to slash duties, which would result in a revenue loss of Rs49,000 crore per annum.
In order to partly neutralise the impact of the price hike, West Bengal chief minister Mamata Banerjee yesterday decided to withdraw sales tax on cooking gas. The decision would reduce the price of a cylinder of LPG by Rs16.
In view of the widespread protests against the price hike, the Congress has also asked its chief ministers to look at the possibility of providing similar relief to the common man.
The group of ministers (GoM), headed by Mukherjee, on Friday decided to raise the price of diesel by Rs3 per litre, cooking gas by Rs50 per cylinder and kerosene by Rs2 per litre.
The price of petroleum products was raised to compensate the oil marketing companies, which are incurring losses on account of the increase in prices of crude in the international market.
Citing revenue sacrifice by the central government, the petroleum ministry, too, has appealed to the states to cut levies on petroleum goods to reduce the burden of the price hike on consumers.
The Centre, it added, "has now removed customs duty on crude oil, reduced customs duty on petroleum products and sharply reduced excise duty on diesel. Through these measures, the government has sacrificed revenue of Rs49,000 crore per annum... The state governments, like the government of India, could also reduce their taxes to help the consumers."
Mukherjee too, while describing the price hike as modest, had earlier urged the states to reduce taxes on petroleum goods to give relief to consumers.
"I do hope the states will also reduce their VATs (Value Added Tax) so that relief could be given to the consumer," the finance minister had said.
The price of crude oil in the international market, according to the petroleum ministry, has gone up from $75 per barrel in June, 2010, when the prices of diesel, kerosene and LPG were raised last, to $110 per barrel. India imports about 84 per cent of its total crude oil requirement.
Despite Friday's increase in prices, the government will have to provide a subsidy of Rs6.13 per litre on diesel, Rs353.72 per cylinder of LPG and Rs24.98 per litre of kerosene.
The total burden on the oil marketing companies has been estimated at Rs1.22 lakh crore.
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