Money > Budget > Budget News & Analysis FEBRUARY 9, 2002 I 14:30 IST rediff.com
  Budget Special
The Union Budget 2001-02
Economic Survey 2001-02
Exim Policy 2001-02
Credit Policy 2001-02
Railway Budget 2001-02
Budget Tutorial
Budget Process
Budget 2000-01
Budget 1999-2000
 



Petrol may be cheaper by 5.22% in April

Hemangi Balse & V Phani Kumar

Diesel is likely to be dearer and petrol cheaper after the dismantling of the administered price mechanism from April 1, 2002 according to the ministry of petroleum & natural gas' preliminary calculations.

Assuming that international crude prices hold at $20 per barrel, at "the existing levels of excise duty", a ministry note, written in the last week of January says, consumer petrol prices ex-Delhi would be Rs 26.10, which is 5.22 per cent lower than the current price of Rs 27.54 per litre.

However, diesel prices will marginally move up by 1.22 per cent to Rs 17.30 from the current price of Rs 17.09 per litre.

The ministry's calculations, appended to the consultative note, assume that excise duty on petrol is maintained at 90 per cent ad valorem and on diesel at 20 per cent. The ministry takes into consideration an exchange rate of Rs 48 to the dollar. Obviously, with the dollar appreciating against the rupee, there will have to be some upward revision in the domestic retail prices.

But, in the far out circumstance that international crude prices move up to $30 per barrel, the ministry's calculations show the retail price of petrol will come to Rs 35.50 per litre (with ad valorem duties) and Rs 31 per litre with a specific excise duty. Similarly, diesel prices will move up to Rs 23.55 (ad valorem) and Rs 22.50 (specific duty). The ministry has taken the specific duty rate as equal "to the amount corresponding to the present duty rate applied to the product prices."

Any changes in these duties, or sales tax imposed in various states or the exchange rate would alter these prices correspondingly.

The ministry has been trying to mitigate the impact of migration post-APM by proposing a specific duty structure instead of ad valorem duties. The specific duty structure, which is in line with the practices of many developed and developing countries, is being considered by the ministry to eliminate the compounding impact felt on domestic prices due to the fluctuations in international prices.

In order to "contain the differentials in the retail consumer prices of petroleum products", the ministry has mooted the provision of freight subsidy for far-flung areas, so that retail prices are not inordinately high in these areas.

The freight subsidy, according to the sources, may be accounted for in the Union Budget.

Powered by

YOU MAY ALSO WANT TO READ:
The Rediff Budget Special
Run-Up To The Budget
Money


 
  © 1996 - 2002 rediff.com India Limited. All Rights Reserved.