The government will not step in to check rising petrol and diesel prices, and will instead continue with the dynamic pricing formula introduced in June this year. It is, however, considering bringing petrol and diesel under the Goods and Services Tax net to curb unpredictability.
Knee-jerk reactions cannot dictate the government's fuel pricing policy, oil minister Dharmendra Pradhan said in a press conference. The government has no intention to interfere with the day-to-day business of oil marketing companies, he said, adding that fuel retailers have not been asked to absorb rising fuel prices driven by higher cost of crude.
Bringing fuel within the ambit of GST would ensure uniformity in prices, he said. Currently, a value added tax and excise duty is imposed on oil, which varies from one state to another.
Domestic fuel prices touched a three-year high in June when the government started revising fuel prices daily in a few metro cities, in keeping with crude price fluctuations.
Stocks of oil marketing companies Indian Oil Corporation Ltd. , Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd. fell on Wednesday after multiple media agencies reported that the government may ask state-run fuel retailers to absorb fuel price increases. The S&P BSE Oil and Gas index closed 1.7 percent lower.
The spike in fuel prices is mainly due to global factors, according to Pradhan. The back-to-back hurricanes in the U.S. led to an 18-20 percent rise in petrol and diesel prices over the last three months as refineries reduced their output, Pradhan said. He added that $55 per barrel of crude is “affordable” and fuel prices are likely to ease in the coming days.
The daily pricing mechanism in fuel is the “most transparent and reassuring” formula for consumers in the long-term, the oil minister said.
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