NEW DEHI, FEBRUARY 29: Union petroleum minister Ram Naik finally got the reassurance he was waiting for from the finance minister before he could implement his harsh decisions on petroleum product prices.The customs duty on both crude oil imports and petroleum products have been cut by five per cent. Naik had said that all he needed was a five per cent concession on the import duty on crude to be able to bridge the oil pool deficit without hurting consumers.
Sinha's Budget proposals will make it possible for the petroleum minister to increase the basic price of diesel and bring down the retail price of petrol. Diesel and jet fuel prices at home are already Rs 1 per litre higher than rates prevailing in the world market. At the time of writing, however, it was still not clear whether the duty cuts would synchronise with an increase in the basic prices of petroleum products.
For the petroleum sector, the budget has the following in store:
It proposes to bring down the customs duty on crude oil to 15 per cent from 20 per cent.
Slashes the customs duty on petroleum products to 25 per cent from 30 per cent.
Rationalises the excise duty rate for petrol to 32 per cent from 40 per cent before. Petrol attracted 24 per cent excise duty, apart from a special excise duty of another 16 per cent. In the proposals for the coming fiscal the excise on petrol comes down to 16 per cent, which compounded with the special excise duty of another 16 per cent works out to an effective duty of 32 per cent.
Raises the import duty on kerosene meant for the parallel market (or not intended for the public distribution system) to 35 per cent from 30 per cent at present.The petroleum minister has been campaigning against adulteration of costlier petroleum products with kerosene and the higher duty will bridge some of the price differences. The free market price will move up along with the subsidised price when the government finally rolls back some of the subsidy on kerosene later this month. Naik threatens to make subsidised cooking fuels like liquefied petroleum gas (LPG) and kerosene dearer in March. Sinha has made that decision easy for him, by leaving the concessional eight per cent excise rates on LPG and kerosene untouched.
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