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Lok Sabha
Shri Mani Shankar Aiyar, Minister of Petroleum & Natural Gas and Panchayati Raj stated in the Lok Sabha today that Government took unparallel measures to protect Indian consumers against the worst impact of steep increase in international oil prices. Replying to a question in the House he said that considering 70% high import dependence for crude oil, the increase in international prices does impact on the domestic consumer prices of petroleum products. However, steps have been taken to contain the impact of such increases in the domestic consumer prices of four major products, viz., PDS kerosene, domestic LPG, diesel and petrol. The government reduced excise duties on petrol diesel and domestic LPG, by 4%, 3% and 8%, respectively effective 16.6.2004. Later, effective 19.8.2004, the excise duties on petrol, diesel and PDS kerosene were reduced by 3%,3% and 4% respectively. Also, effective 19.8.2004, customs duties on petrol, diesel, PDS kerosene and domestic LPG were reduced by 5% each. He called upon State Governments to follow the example set by the Central Government and reduce the sales tax levied by them on petroleum products. He regretted that except the State Government of Orissa no other government has so far given a positive reply to his appeal in this regard.
Replying to the demand for reduction in duties, the Minister pointed out that oil sector makes an important contribution to the revenues of central and state governments which in turn are utilized for developmental programmes. He underlined that in view of reduction in central duties effected by government under the equitable burden sharing, scope for further reduction is limited as the developmental plans would be adversely affected. The Revenue collected are meant for future investment in these plans.
He further said that PDS kerosene and domestic LPG are subsidized products. In addition to the Government subsidy, oil PSUs have been sharing the burden by not passing the full increase in international prices on to the domestic consumer prices of these products. Despite the steep increase in international prices, the selling price of PDS kerosene has not been increased since 1.4.2002 and the RSP of domestic LPG was increased by only Rs.20/cylinder each, effective 16.6.2004 and 5.11.2004 respectively. During the first half of 2004-05, the estimated provisional under-recovery/subsidy on these products was as follows :
Product
Government Subsidy
Oil PSUs’ under recoveries
Total Subsidy/under-recoveries
PDS Kerosene (Rs./litre)
0.82
7.05
7.87
Domestic LPG (Rs./Cylinder)
22.58
113.03
135.61
In addition, Shri Aiyar informed that oil PSUs have had under-recoveries during 2004-05 for non-revision in the domestic consumer prices of petrol and diesel in line with the international prices. The total under recoveries to the oil PSUs during April-September 2004 on account of LPG and kerosene have been to the extent of Rs.9,801 crore and their profits have come down by Rs.3,167 crore during April-September, 2004 against the corresponding period of 2003. If tariff protection to oil PSUs is removed that would lead to a loss of about Rs.5092 crore.The Minister also informed that the average price of crude oil comprising Indian basket has risen to $37.5 per barrel since April this year as against an average price of $28 during 2003-04. The import bill during 2004-05 is expected to be about $24 billion against $18 billion during 2003-04.
Replying to another query, Shri Aiyar pointed out that if we compare with the neighbouring countries the prices paid in India for PDS kerosene and domestic LPG are lower. This is evident from the following :
Product
India(Delhi)
Pakistan (Karachi)
Bangladesh (Dhaka)
Sri Lanka (Colombo)
Nepal (Kathmandu)
Kerosene (Rs./Ltr)
9.01
18.68
15.44
11.30
15.30
LPG (Rs./Cyl)
281.60
411.99
283.05
372.62
462.25
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