Government looking to formulate ‘long term’ solution for surging fuel prices

NEW DELHI, MAY 24
The government is working on a “long-term solution” to deal with volatility in global crude prices and frequent revisions in retail rates of petrol and diesel, law and IT minister Ravi Shankar Prasad said after the Cabinet’s meeting on Wednesday without outlining the options being considered.
“The government is keen that instead of having an ad hoc measure it may be desirable to have a long-term view which addresses not only the volatility but also takes care of the unnecessary ambiguity arising out of frequent ups and downs,” he told a news conference.
It seems the government wants to wait and watch the oil prices some more. But if projections by various investment banks and trade analysts are anything to go by, it may have no other option but to cut excise duty.
Other options such as changing the pricing formula to revise customs duty on petrol and diesel, even though they are not imported, at best will be the topping. Dumping daily revisions will bring the government’s reforms agenda into question.
India is particularly at risk from stronger global prices for crude oil as it is the third-highest importer of the commodity buying about 80 per cent of its oil needs.
M K Surana, chairman of state-run fuel retailer and refiner Hindustan Petroleum Corporation, said the government should review taxation of petrol and diesel to provide relief to the customer.
NEW DELHI: The government is working on a “long-term solution” to deal with volatility in global crude prices and frequent revisions in retail rates of petrol and diesel, law and IT minister Ravi Shankar Prasad said after the Cabinet’s meeting on Wednesday without outlining the options being considered.
“The government is keen that instead of having an ad hoc measure it may be desirable to have a long-term view which addresses not only the volatility but also takes care of the unnecessary ambiguity arising out of frequent ups and downs,” he told a news conference.
It seems the government wants to wait and watch the oil prices some more. But if projections by various investment banks and trade analysts are anything to go by, it may have no other option but to cut excise duty.