Budget likely to rejig duty on petrol, diesel

“Rising inflation is a matter of concern for the government. Serious efforts are being made to re-jig the duty structure on petroleum products in the forthcoming Budget so that any hike in retail prices of auto fuels is avoided,” sources close to the Budget making exercise told Deccan Herald.

Efforts are also being made to leave some “elbow room” to state-owned Oil Marketing Companies (OMCs) to slash retail prices of auto fuels, sources said. “The basic objective behind proposed duty restructuring will be to avoid any further hike in retail prices. Reduction in retail prices is secondary,” sources said.

As the government is now battling inflation, which is now hovering above alarming level of 8 per cent, it would not like any further hike in retail prices of auto fuels—especially the widely used diesel. The move seems all the more probable as the international crude oil prices are ruling high at around 100 dollars a barrel.

It is also because in the current fiscal 2010-11 the state-owned OMCs are projected to incur a revenue loss of Rs 76,559 crore at current global crude oil prices.