Minister rules out intervention in daily pricing; non-committal on cutting taxes

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

Saying that many States had drastically increased value-added tax, he said, “It is high time that the GST Council considered bringing the petroleum products in the ambit of GST.”

He, however, remained non-committal on cutting taxes to soften the blow of the relentless rise in prices since the government need to finance huge infrastructure and social projects has to be balanced with consumer needs. Terming the criticism of a spike in rates as unfair, he said the drop in prices for over a fortnight after the daily price revision was introduced has been ignored and only the “temporary” phenomenon of a rising trend was being highlighted.

India relies on imports to meet 80% of its needs and so domestic fuel rates have been aligned to the 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 being revised daily, Mr. 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... government will interfere only to improve operational efficiency of oil companies,” he said after meeting the heads of state-run firms.

He was replying to questions from presspersons on whether the government plans to stall the daily price revision in view of the spike in rates.

Mr. Pradhan said the global prices had risen due to factors such as the hurricanes in the U.S., and there were already indications of a “softening in the rates”. “As a result of these hurricanes, 13% of U.S. refinery capacity was shut down,” he said. Asked if the government would cut excise duty, he said, “That is a call the Finance Ministry has to take but one thing is very clear — we have to balance 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?”