MADURAI: The Tamil Nadu Chamber of Commerce and Industry has called it ‘distressing’ and strongly objected the Central Government’s decision to hike excise duty on petrol and diesel despite steep fall in international crude oil prices and in the midst of growth stagnation fears of Indian economy. In a press statement here today- 17th March 2020- Chamber president Mr.N.Jegatheesan and secretary Mr.J.Selvam, urged the Centre to reconsider its move to hike the excise duty.
“With the economic growth already in stagnation, the threatening Corona virus impact, rising unemployment ratio, stock market crash and falling Indian rupee vis-à-vis international currencies, the woes of industry are accentuated and to the people in the country,” the Chamber press release pointed out.
The on going tussle between Russia and Saudi Arabia has multiplied production of crude oil and the price has steeply fallen down in international markets. Under the circumstances, everyone expected that diesel and petrol prices would be reduced at least by Rs. 10 per litre in the country.
“Instead the Central govt has chosen to increase the crude oil price by Rs. 3 per litre. As per the order of the Central Board of Indirect Taxes and Excise, special excise duty on petrol is increased by Rs. 6 per litre and diesel by Rs. 4 per litre. Road tax has also been collected at Rs. 2 per litre on diesel and petrol. It is calculated that the Centre Govt will net an additional revenue of Rs. 39,000 crore by this price escalation,” the release said.
It is ironical that whenever crude oil price increased in international markets, petrol and diesel prices within India were hiked pro rata, but when the prices come down, the resultant benefit do not percolate to the people.
In order to protect public sector oil Companies against fall in crude oil price, in India prices of petrol and diesel are determined by Trade Parity Price – TPP policy taking into consideration 80 percent of the actual import price and adding 20 percent export price. This is said to be the reason for the present price increase opted by the Central govt.
The Tamil Nadu Chamber press release had pointed out that from one barrel of crude oil, 159 litres of petroleum products can be produced. Prior to the present sharp dip in the crude oil prices, the production cost of one litre of petrol was Rs. 30.08. As on 12th March the cost slipped to 17.79 per litre. Upon this base price, Central govt collects excise duty on petrol at Rs. 19.98 and on diesel at Rs. 15.83 per litre. In addition, Tamil Nadu Government levies VAT on petrol at 34 percent and on diesel at 25 percent per litre. After all these levies the public sector oil companies nets Rs. 13 per litre as revenue.
From 2014 November and 2016 November the Central govt hiked excise duty on petrol and diesel prices 9 times. It is worth noting whenever the crude oil prices fell in that period, the Central Govt devoured the benefit through taxes instead of passing it on to the people.
“Petrol and diesel constitute the real fulcrum of our production. Once in a blue moon international crude oil prices comes down sharply, it is unfitting for the Central govt to keep all its advantages to itself. All sections of people in the country avidly expect that the Central Govt will modify the basic method of calculation for fixing the domestic price, reduce the 15 days waiting period and opt for appropriate additional reduction in the tax incidence and thus provide the crucial leg up for the revival of the nation’s economy,” the Tamil Nadu Chamber of Commerce and Industry has appealed in its press release from Madurai today – 17th March 2020.
