Petromin to FM: Cut diesel duty to check inflation

Petroleum Minister Murli Deora will press for an excise duty cut on diesel when he meets Finance Minister P Chidambaram tomorrow to rein in inflation, which hit a two-year high of 6.12% last week.

"Transportation cost has a cascading effect on prices of commodities. Since most goods are moved on diesel trucks, a case for an excise duty cut on diesel will be made when Deora meets Chidambaram to present a pre-budget memoranda," an official source said.

The Petroleum Minister was seeking a shift to specific duties on fuel from the current mix of ad-valorem and specific duties.

The current excise duty on petrol is 8.16% ex-factory price plus Rs 13.26 per litre, while for diesel it is 8.16% plus Rs 3.32 a litre. The ministry has suggested a specific duty of Rs 15.92 for petrol and Rs 6.08 per litre for diesel in the forthcoming budget.

The official said that the ministry had also proposed including diesel in the list of "declared goods". This would mean that the fuel attracts a uniform sales tax of 4% instead of the present rates that ar as high as 29%. The Finance Minister had included LPG in the list of "declared goods" in Budget 2006.