Want petrol, diesel to come under GST says Oil Minister Pradhan

NEW DELHI: Oil Minister Dharmendra Pradhan on Wednesday ruled out government intervention to disrupt the daily revision in petrol and diesel prices despite Rs 7.3 per litre spike in rates since July, saying the reform will continue.

He, however, remained non-committal on cutting taxes to soften the blow of relentless rise in prices since July 3, the government need to finance huge infrastructure and social projects has to be balanced with consumer needs.

Terming the criticism of spike in rates as unfair, he said the drop in prices for over a fortnight after the daily price revision was introduced on June 16 has been ignored and only "temporary" phenomenon of rising trend is being highlighted.

India relies on imports to meet 80% of its needs and so domestic fuel rates have been aligned to movement of equivalent product prices in the international market since April 2002.

Previously the rates were changed every fortnight but since June 16 they are revised daily, Pradhan said, adding that the daily revision immediately passes on the benefit of any reduction in international oil prices to consumers and avoids sharp spikes by spreading them in small doses.

"The government has no business to interfere in day to day operations of oil companies. If at all, efficiency is only areas government will interfere to improve operational efficiency of oil companies," he after meeting heads of state- run firms.

He was replying to questions from reporters if the government plans to stall the daily price revision in view of the spike in rates.

Pradhan said the global prices have risen due to factors like hurricane in the US and there already are indications of "softening in the rates".

"As a result of these hurricanes, 13 per cent of US refinery capacity was shutdown," he said.

Asked if the government will cut excise duty to soften the blow, he said: "That is a call the finance ministry has to take but one thing is very clear - we have to balance the developmental needs with consumer aspirations."

"We have to fund massive highways and road development plans, railway modernisation and expansion, rural sanitation, drinking water, primary healthcare and education. Allocations on all these heads has gone up significantly. Where do we get resources for these," he said.

The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting international oil prices. In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre.

Govt wants it to come under GST. It will bring predictability to cost: Union MinDharmendra Pradhan on petrol&diesel to be included under GST pic.twitter.com/v5AofirBub

— ANI (@ANI) September 13, 2017

The duty hike resulted in government's excise mop-up more than doubling to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.

The windfall from the excise duty hikes helped the government bridge its budgetary deficit.

He said 42 per cent of excise collections are transferred to state government for infrastructure and welfare programmes. Also, many state governments have drastically increased VAT.

"It is high time GST Council should consider bringing the petroleum products in the ambit of GST," he said.

While petrol prices have increased by Rs 7.32 to reach Rs 70.38 a litre in Delhi, the highest since August 2014, diesel rates have risen by Rs 5.36 to Rs 58.72.

Pradhan said it is the prices now are not the highest. "The all time high retail selling price at Delhi of petrol was Rs 76.06 per litre on September 14, 2013," he said.

The daily price revision, he said, is in the interest of consumers.

State-owned oil companies in June dumped the 15-year old practice of revising rates on 1st and 16th of every month and instead adopted a dynamic daily price revision to instantly reflect changes in cost. Rates during the first fortnight dropped but have been on the rise since July 3.

"Daily revision in prices is good. When we started daily revisions on June 16, rates dropped in the first fortnight. Thereafter it has increased mainly because of rise in global oil prices," he said.

Daily revision, he said, results in any drop in international oil rates being passed on to consumers immediately rather than having to wait for 15 days. In the reverse scenario when international oil rates rise, pump prices are hiked by few paise per day.

The rate changes are being done on a transparent basis and city-wise prices are available through SMS, he said, adding that the daily price change model best reflects the happenings in the market.