The central government will lose about Rs 24,000 crore of revenue during the current fiscal on account of reduction in customs and excise duties on petroleum goods.
"It is Rs 49,000 crore [duty loss] for whole year. Then there is also an element of loss which states have to share. I am told that totally [we] are losing about Rs 24,000 crore, and then Rs 10,000-11,000 crore loss will be of states," Finance Secretary Sunil Mitra told PTI.
The slew of tax cuts on petroleum products are estimated to cause annual revenue loss of Rs 49,000 crore. It also led to speculation that the Centre may not be able to meet its fiscal deficit target of 4.6% during 2011-12.
When asked about the impact of duty cuts on the government's fiscal health, Mitra said: "How it will impact [fiscal deficit], I can't say. In two months of a year, you don't decide these things."
Noting that revenue collection was not in line with the target, he said the government would do whatever was needed to contain the fiscal deficit.
The government last weekend hiked the price of diesel by Rs 3 a litre, kerosene by Rs 2 a litre and cooking gas by a steep Rs 50 a cylinder to help the oil marketing companies to partly cover up the losses on account of sale of petro products.
However, while raising the prices, it also slashed customs and excise duties to limit the burden on common man.
The price of crude oil in the international market, according to Petroleum Ministry, has gone up from $75 per barrel in June, 2010, when the prices of diesel, kerosene and LPG were raised last, to $110 per barrel. India imports about 84% of its total crude oil requirement.
