Deora pushes Chidamabaram on excise cut for diesel

23 January 2007

Petroleum minister Murli Deora will press for an excise duty cut on diesel when he meets his counterpart in the finance ministry P Chidambaram today to rein in run away inflation rate, which at 6.12 per cent is at a two-year high.

Since transportation cost has a cascading effect on prices of commodities and most goods are moved on diesel trucks, a case for a excise duty cut on diesel will be made by Deora to present his ministry's pre-budget memoranda.

The petroleum minister wants 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 per cent of ex-factory price plus Rs13.26 a litre, while for diesel it is 8.16 per cent plus Rs3.32 a litre. The petroleum ministry has suggested a specific duty of Rs15.92 for petrol and Rs6.08 per litre for diesel in the forthcoming budget.

The petroleum ministry had also proposed inclusion diesel in the list of "declared goods", enabling fuel to attract a uniform state sales tax rate of four per cent instead of present dispensation of rates as high as 29 per cent.

In the 2006 budget the finance minister had included LPG in the list of declared goods.