CPI(M) Proposals On Oil Prices Given To PM

THE CPI(M) general secretary Prakash Karat and Polit Bureau member Sitaram Yechury met the prime minister on September 5, 2005 and gave him a note proposing clear steps to reduce the impact of the rise in the prices of international crude oil.

The proposals were as follows:

•  Suspend Road Cess Increase: Government increased the road cess by Rs 0.50/litre for petrol and diesel from March 2005. This amount may be suspended till international oil prices return to reasonable levels, or till the end of 2005-06.

Amount available: about Rs 1500 crore for six months

• Forego Increased Customs Duty: Government has been indicating that the crude prices have risen from $40/bbl (when the budgetary projection were made February 2005) to $60/bbl, a 50 per cent increase.  The increase in customs duty, therefore, may be foregone.

Amount available: This would make available about Rs 3,300 crore

•  Forego Increased Excise Duty: Government should forego increase in excise duty, due to higher prices, as it cannot make profit out of an abnormally high international oil price scenario. In addition, excise duty may be frozen at current level so that when price is increased no part accrues to the government.

Amount available: About Rs 1000 crore

• Make additional crude cess available for stablisation fund: The NDA government had raised cess on domestic crude from Rs 900/MT to Rs 1800/MT in 2002.  The incremental cess of Rs 900/MT should be used for stabilisation fund.

Amount available: About Rs 2700 crore

•  Duty free benefit for exports should be suspended: While we had advocated this idea many months ago, no action has been taken. Now, China has withdrawn export benefits for its refineries for petroleum products such as petrol and naphtha. The export benefit should be immediately withdrawn.

Amount Available : About Rs 2000 crore

•  Review and withdraw sales tax concessions to private refineries:  Tax concessions are no longer required to sustain or support private refinery operation. Profit of RIL jumped to Rs 7572 crore in 2004-05 from Rs 5160 crore in 2003-04. Obviously, a company that earns so much does not need any State support whatsoever. Therefore all benefits such as sales tax deferment and export benefits must be immediately withdrawn, as they have not only more than served their purpose but could be better used in meeting the needs of the people/developing State infrastructure otherwise.

•  Recover Unpaid Excise Duty From RIL: Newspapers have reported that Reliance Industries Ltd (RIL) has been served a show-cause notice by the Central Excise Department regarding non-payment of additional excise  duty to the tune of Rs 10,500 crore on export of petroleum products from its refinery at Jamnagar in Gujarat.  The amount should be recovered and used for  absorbing the international price rise.

• Total amount available: With all the above around Rs 21,000 crore would be available without considering sales tax concessions. 

(INN)