With rupee depreciation leading to jump in oil import bill, Petroleum Minister S. Jaipal Reddy on Tuesday said there is an immediate need to raise fuel prices, but refused to say when the hike will actually take place.
“It (price increase) is very essential but (before hiking rates) we have to talk to political parties,” he told reporters here on way to Ashgabat for signing of the agreement for the Turkmenistan-Afghanistan-Pakistan-India pipeline.
The government had decontrolled petrol price in June 2010 but rates were last increased on November 4 last year. This despite oil price rising by 14 per cent and 7 per cent fall in value of rupee against the US dollar.
Price of diesel, kerosene and cooking gas were raised in June last year.
“If rupee depreciates by one against the US dollar, our oil companies lose Rs 8,000 crore (annually),” Mr. Reddy said.
“Rupee yesterday dipped (to an all-time low of) Rs 55 (to a US dollar). Last year it was Rs 46. This translates into a loss of Rs 72,000 crore (on account of rupee depreciation) this year.”
“Seeing all this, something needs to be done, but when will it be done, how it will be done... I cannot make a forecast,” Mr. Reddy said. “There is no decision on raising price or not raising prices.”
State-owned oil firms, who had in the fiscal ending March 31, 2012 lost Rs 4,860 crore on petrol sales, are currently losing Rs. 6.28 per litre on petrol. After including 20 per cent VAT, the desired increase in petrol price in Delhi comes to Rs 7.53 a litre.
Keywords: Jaipal Reddy, fuel price hike, rupee, forex
It is the advoleram levy of Taxes that is compunding the increase of Fuel prices.
If Government has a will and real concerns for the plight of the ordinary citizens, trade commerce and industry, let it freez the advoleram rated/computed quantum of both State and Central Taxes at the level of 2004, the time present government came to power and leave the market forces oriented pricing in the hands of oil companies and also remove all subsidies.
The prices will fall drastically.
Taxing in billions and dressing the wounds by subsidising in millions theory should be rejected.
For every rise of single paisa in the costs, there is also equal or more than equal rise in Taxes of the governments and thus it is not appropriate to blame the international rise in the pricing alone. The greed in levying and collecting the higher taxes is equally responsible which the governments are unwilling to cure.
This is a government incapable of making any decisions, except make statements to the media. Fuel prices need not be hiked if government simply reduces excise duties, which are amongst the highest in the world. But this government doesn't want to let go of that cash cow, so they'll simply throw the burden onto the common man.
I have noiced that there is a sense of urgency in almost all the countries that I have visited, to find alternatives to petrol and diesel. There is significant investment in biodiesel and ethanol. Such investments, especially coupled with disposal of organic waste would, over time, kill two birds with one stone -- significantly reduce our crude bill and curb the resultant inflation. Other than lip service and micro-level private initiatives, the common man in India does not see anything happening. Sincerely hope that the next government takes this up on a war footing to ensure that the common man (read, your average voter) is around to vote the next time round.
Reddy sir we need restructuring of petro products prices taxation and need deregulation. Cooking fuel prices are needlessly at mineral water levels as infinite solar is free and dirt cheap induction is cheaper than even subsidized lpg. If deregulated and taxed less petro products lpg kerosene diesel and petrol will come to sub fifty levels per liter at least at current soft prices of crude and their increased in sells and exports will take care for taxes lost.
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