Amid unabated rise in petrol and diesel prices, Oil Minister Dharmendra Pradhan today said the government is concerned about the pinch to consumers but a balance has to be struck between their interest and fiscal needs.
He was, however, non-committal on the government's cutting excise duty to soften the blow of rising international oil prices which have pushed petrol price to 55-month high of Rs 74.63 a litre and diesel to a new high of Rs 65.93.
"We are concerned about pinch... We are concerned about the price rise," he told reporters on sidelines of an industry event.
Declining to say as to what the central government was doing to address the issue, Pradhan said the states should cut sales tax or VAT on petrol and diesel to ease the burden.
Asked if his ministry has sought a reduction in excise duty, he said working "piecemeal" will not help.
"Let's see things more holistically. We have to manage the fiscal balance and at the same time, we have to also protect consumer interest," he said adding the government is collectively addressing the issue.
Oil prices is "under our close watch," he said.
Earlier this week, a senior finance ministry official had stated that a cut in excise duty was not advisable if the government was to stick to the path of reducing budgetary deficit.
The government is targeting reducing fiscal deficit to 3.3 per cent of the gross domestic product (GDP) in the current fiscal, from 3.5 per cent last fiscal.
"Every rupee cut of excise on fuel will result in a loss of Rs 13,000 crore to the government," the official had said. "Fiscal considerations are far higher than one or two rupee price impact on consumers. One or two rupee increase doesn't impact inflation," he had said.
The central government levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per litre on diesel. State sales tax or VAT vary from state to state. In Delhi, VAT on petrol is Rs 15.84 and Rs 9.68 a litre on diesel.
Pradhan blamed geopolitical reasons for the spike in international oil prices, which is getting translated into increases in retail selling price of petrol and diesel.
Listing the reasons, he said oil cartel OPEC has agreed to continue with output squeeze while the situation in Venezeula, Iran and Syria were contributing to the spike.
State-owned oil firms, which have been since June last year revising auto fuel prices daily, have kept prices unchanged for the second day today. This after petrol price was hiked by 72 paisa a litre in last 10 days and diesel by a rupee.
Petrol in the national capital now costs Rs 74.63 a litre, the highest since September 14, 2013, when rates had hit Rs 76.06. Diesel price at Rs 65.93 is the highest ever.
India has the highest retail prices of petrol and diesel among South Asian nations as taxes account for half of the pump rates.
The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.
Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT, but just four of them - Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh - reduced rates while others including BJP-ruled ones ignored the call.
In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government's excise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
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