The Centre is working out a strategy which will include restructuring of petroleum duties and floatation of oil bonds in the current year so that the impact of oil pool deficit on the Union Budget is considerably reduced.
The strategy is being worked out in the light of the government's fear that the oil pool deficit, which was around Rs 13,000 crore on July 31, 2001, will grow to Rs 16,000 crore by the end of the current fiscal.
As the absorption of the entire oil pool deficit in the budget is being considered fatal for the economy, it has been planned to restructure duties on crude oil and petroleum products during the current year so as to stem the growth of the pool deficit.
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Though the finance ministry may not fully give in to the petroleum ministry's demand for reducing customs duty on crude oil and major petroleum products to five and 15 per cent, respectively, and excise duties on petrol and diesel to the pre-budget level of 16 per cent and 12 per cent, it is expected to bring this down moderately so that it does not hit the government's revenue hard.
The idea, according to petroleum ministry officials, is to keep the oil pool deficit to the minimum at the end of the financial year. Though the finance ministry officials refuse to divulge the extent to which they consider the oil pool deficit manageable, it is leant that the ministry will be comfortable if the deficit remains around the current figure of Rs 13,000 crore.
As the oil pool will have to be wound up by the end of the current fiscal when administered pricing mechanism is dismantled, the finance ministry will issue oil bonds to petroleum companies against their outstandings to the Oil Co-ordination Committee (OCC). A part of the deficit may be absorbed in the general budget as well.
The strategy was discussed at a meeting convened by the petroleum secretary here recently. The meeting was attended, among others, by senior officials of the finance ministry.
While officials of the petroleum ministry pressed for reduction of duties to the levels approved by the Cabinet for the current fiscal, finance ministry officials are learnt to have expressed their inability in this regard in view of the revenue collections already touching a historic low this year.
However, they were certain that some restructuring of duties was possible even under these trying circumstances.
It is leant that the finance ministry officials did not make any comment on the petroleum ministry's other demand -- to allow OCC to withdraw from the public account its deposit of Rs 4,429 crore.