Secretaries discuss oil duty cuts

The Committee of Secretaries is today believed to have discussed slashing the Customs duty on crude oil, petrol and diesel, and cutting the excise duty on LPG and kerosene to check the impact of rising crude prices on the domestic economy.

The meeting, chaired by Cabinet Secretary BK Chaturvedi, discussed the oil ministry's proposal to halve the Customs duty on crude oil to 5 per cent, official sources said.

Petrol and diesel prices have not been raised since August 1 despite a surge in crude oil prices, leading to a Rs 2,300 crore revenue loss for public-sector oil firms.

The committee discussed cutting the Customs duty on petrol and diesel from 15 to 10 per cent.

The oil ministry has requested for zero excise duty on LPG and kerosene, the two mass cooking fuels on which oil firms have already lost Rs 4,992 crore.

The ministry estimates the revenue loss for oil firms on account of LPG and kerosene will be Rs 13,250 crore if either prices were not hiked immediately or duties not cut.

"The deliberations of the committee will be placed before the Cabinet," sources said.

The finance ministry, the sources said, was against any cut in the duty on crude oil, the mainstay revenue earner for the exchequer. It is also opposed to the idea of slashing duties on petrol and diesel.

Meanwhile, a World Bank official said the Indian economy was unlikely to be hit by global oil prices in the short term, but growth may be hit if the trend continues.

"It is not a situation that is of immediate concern but if it (high oil prices) continues for a longer term, it will have an impact on growth at the margin," Michael Carter, World Bank Country Director for India, said on the sidelines of a seminar on investment.