People's Democracy

On Petroleum Products Price Hike

At the request of the Petroleum minister, Mr Mani Shankar Aiyar, CPI(M) leaders Sitaram Yechury and Dipankar Mukherjee (Deputy Leader, Rajya Sabha) met  to discuss the issue of hike in the prices of petroleum products. 

The minister explained that with the international prices of petroleum products soaring, there is a need to revise the prices of petroleum products domestically upwards.

The CPI(M) leaders, while recognising the volatility of the international  prices, categorically stated that the burden, however, should not be thrust on to the shoulders of the common man with yet another price hike.  Instead, the CPI(M) leaders suggested that the government must consider the following:

1.  The excise duty structures revised in the last budget were described by the finance minister as being revenue neutral. In a situation where the volatility of international oil prices is impacting on every sector and department in the country, the Finance Ministry should also share the burden. 

2.  Every year, nearly Rs 5,400 crores is collected as cess for the development of the oil industry. This never reaches the oil industry but is used for the other purposes from the consolidated fund of India. This amount must be returned to the oil industry.

3.  In the current budget, the cess for development of roads has been increased from Rs 1.50 to Rs 2. This additional 50 paise amounts to Rs 3,000 crores annually. Given the volatility of the international oil prices, this increase may be suspended for the time being, so that a part of the increased burden may be met without hiking the prices.

4. Currently, the pricing of petroleum products is done on the basis of import parity. But over 90 per cent of India’s imports consist of crude.  The import parity, therefore, should not be on the basis of the international prices of different petro-products but should be linked to the international price of crude only. This will substantially lower the prices of various petro-products like petrol, diesel etc.

If these suggestions are positively considered, then there would be no need to increase the prices of petro-products to meet the extra costs due to high international prices.

The petroleum minister assured the CPI(M) leaders that he will take up these matters with the prime minister and the finance minister and get back with their response.