India cuts levies on petroleum products
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India cuts levies on petroleum products

Wednesday, 18 August 2004, 07:00 Hrs
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NEW DELHI: Finance Minister P. Chidambaram Wednesday lowered customs and excise levies on petrol, diesel, kerosene and cooking gas to spare consumers from the impact of high global crude prices that have shot up to $47 a barrel.

The government has estimated the revenue loss to the exchequer on account of these measures at 25 billion.

A much-awaited official notification said the customs duties on petrol and diesel have been lowered to 15 percent from 20 percent, and for kerosene and cooking gas to five percent from 10 percent.

Similarly, the excise duties have been pruned to 23 percent from 26 percent for petrol, to eight percent from 11 percent for diesel and to 12 percent from 16 percent for kerosene.

The cut in levies for kerosene - one of the few petroleum products India imports besides crude - applies only to that distributed to the poorer sections of society from government-administered shops.

"High crude prices impose difficulties on any economy," Chidambaram told reporters after tabling a statement in parliament.

"We have reduced the customs and excise duties to reduce the burden on consumers. But we hope that crude prices come down," he added.

The cuts were discussed among Prime Minister Manmohan Singh, Chidambaram and Petroleum Minister Mani Shankar Aiyar Monday and the Cabinet Committee on Economic Affairs cleared it the next day, official sources said.

The government has also been concerned over the impact of high oil prices on the rate of inflation, which shot up to 7.61 percent for the week ended July 31, after hovering at around five percent at the beginning of the year.

India imports 69 percent of its crude requirements and high global prices have sent the import bill soaring 61.90 percent in the first four months of this fiscal to $9.90 billion from $6.11 billion during April-July 2003.

Since the cut in customs and excise alone cannot reduce the burden on refiners and consumers, Petroleum Minister Mani Shankar Aiyar has urged state governments to cut their levies such as sales tax.

The Congress party-led government is also proposing to discuss a new package for oil sector with its allies so that it can formulate a long-term plan on how to handle volatility in global oil prices.

Source: IANS
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