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Oil subsidy to rise if crude crosses $90 a barrel: Chawla

Govt may bear one-third of fuel subsidies-finance secretary.

Concerned over the spike in global crude oil prices,the finance ministry on Wednesday said that it was willing to bear a third of the fuel subsidy for the current fiscal and would also consider a review of customs and excise duty on crude oil and petroleum products in Budget 2011-12.“If global crude prices rise (further) above $90 a barrel,oil subsidies will increase. The government is willing to bear one-third of fuel subsidies in the fiscal year that ends in March 2011,” finance secretary Ashok Chawla said on the sidelines of a conference on Public Private Partnerships in infrastructure.At current market level,the three oil marketing companies — Indian Oil Corp,Hindustan Petroleum Corp and Bharat Petroleum Corp are estimated to lose Rs 66,000 crore in 2010-11,petroleum secretary S Sundereshan said earlier this week. The petroleum ministry was hopeful that the finance ministry would bear at least half the subsidy burden. The government had in 2009-10 doled out Rs 26,000 crore to make up for more than half of the revenue loss of state retailers due to selling auto and cooking fuel below imported cost. This year,it has already committed to giving Rs 13,000 crore out of the Rs 31,367 crore revenues state retailers lost on selling diesel,domestic LPG and kerosene below cost.With oil prices at $93.59 per barrel,an empowered group of ministers led by finance minister Pranab Mukherjee is also scheduled to meet on December 30 to consider a hike in diesel and LPG prices. While ruling out any revision in the customs and excise duties on crude oil and petroleum products at present,the finance secretary indicated it could be taken up during the Budget. “At this point of time,there is no detailed thinking or discussion on this,” the finance secretary said adding that if these taxes need any changes,they will be made in the government’s federal budget for the next fiscal year starting April 1.Excise duty accounts for about 29 per cent of petrol’s retail price. A cut in duties would also mean lower subsidy outgo.

First published on: 23-12-2010 at 02:32 IST
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