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Petrol, diesel may cost less; LPG to pinch more

business Updated: May 27, 2014 00:31 IST
HT Correspondent
HT Correspondent
Hindustan Times

It may turn out to be a mixed bag for consumers of petroleum products including petrol, diesel, cooking gas and kerosene under the new Bhartiya Janta Party (BJP)-led government.

All indicators point that auto fuel (petrol and diesel) prices may come down in the coming months as correcting anomalies related to taxation on petroleum products is one of the top priorities of the Modi government. In the immediate run, there could be some upward revisions in the price of the two fuels.

However, there could also be an upward revision in the price of cooking gas (LPG) along with a reduction in the cap on the number of subsidised cylinder from 12 a year.

“Various anomalies related to taxation by the Centre as also the calculation of under-recoveries on the sale of petroleum products by oil firms will be reviewed as this is one of our top priorities... and the move will bring down the consumer price of the two fuels,” a senior BJP official told HT.

“Petroleum products are taxed heavily in India and once taxation is brought at par with global standards, auto fuel prices would come down,” he said, adding, the proposal has the consensus of top BJP leaders as discussed during backroom party discussions.

At present, state and central levies together account for `25 in a litre of petrol priced at `71.41 in Delhi. Similarly, the taxation component on diesel is around `10 a litre although the fuel is currently being sold at a loss of `4.41 a litre in Delhi. Oil companies are losing `450 on every LPG cylinder and the number of subsidised cylinders may be reduced.

A leading institute in Maharashtra has also been given the mandate to abolish various taxes levied on petroleum products. “All this will become part of the overall taxation reforms that the party plans to implement.”

While the move could lead to a dent in revenue collections, other means of collecting taxes will be looked into to compensate for the gaps arising from this move.