Oil minister Dharmendra Pradhan: Government won't intervene to cut petrol, diesel prices

Oil Minister Dharmendra Pradhan

Other cities have also experienced significant increases in petrol and diesel prices during this period.

Union Petroleum Minister Dharmendra Pradhan on Wednesday said that the Centre would not intervene to regulate petrol and diesel prices, The Hindu Business Line reported.

Terming the spike as temporary, Pradhan said the drop in prices for over a fortnight after the daily price revision was introduced has been ignored and only "temporary" phenomenon of rising trend is being highlighted.

"GST is the only way to have a rational price mechanism for petroleum products. the industry has been demanding it and Finance Minister Arun Jaitley (who heads the GST Council) is very interested to have it", Pradhan said, pointing to the substantial difference in prices between Delhi and Mumbai, for instance, on account of local taxes. Prior to that, there was provision of fortnightly price revision.

"The government can not change fuel pricing on a knee-jerk basis", Pradhan told reporters here, noting that global crude oil prices had recently gone up as much as 15 per cent owing to production being hit in the U.S. owing to the impact of multiple hurricanes.

He said dynamic pricing ensures that the benefit of even the smallest change in global oil prices can be passed down the line to the dealers and the end-users. Pradhan also passed the buck to Finance Ministry when he was asked about whether there is any chances of excise duty cut on petroleum product prices. Allocations on all these heads has gone up significantly. Petrol price in Delhi on Tuesday was at Rs 70.38 per litre, whereas in Mumbai a litre of petrol costs Rs 79.48. The windfall from the excise duty hikes has helped the government bridge its budgetary deficit.

At present, petroleum products have been put outside the Goods and Services Tax Bill ambit.

State-owned oil companies in June dumped the 15-year old practice of revising rates on 1st and 16th of every month and instead adopted a dynamic daily price revision to instantly reflect changes in cost.

"Dynamic fuel price mechanism is the most transparent model for consumers; it can't be changed on knee-jerk basis", he said.

States are opposed to bringing petrol and diesel under GST as these are their major sources of revenue.

Dynamic fuel pricing is followed in many developed countries and India opted for it as a response to the recent volatility in global crude oil prices.

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