Delhi: Niti Aayog, the policy think tank of the government has reacted to the recent record hike in petrol prices. Speaking to The Indian Express, Rajiv Kumar, vice chairman, NITI Aayog, said that states need to take charge in trimming down the duties on the fuel.
“The states must cut their taxes because they have got ad valorem (percentage-based) taxes”, he said.
“As the prices have gone up, they have been getting a windfall gain, which can hardly be continued. So they must reduce it below 27 per cent… a 3-4 percentage point cut is doable”, he further added.
However, he also added that the Central government should also find the fiscal space and then cut the excise duties.
Cautioning the government, he also said that the government should make sure that it doesn’t do anything to weaken the nascent uptick in the economy, and simultaneously find enough fiscal space to absorb the higher oil price by attempting things not done in the past.
The government does not want to cut excise duty and is looking at alternative means to reduce petrol and diesel prices that had on Tuesday touched an all-time high of Rs 78.43 per litre and Rs 69.31 a litre, respectively.
Oil producers ONGC and Oil India Ltd had till June 2015 made good as much as 40 per cent of the under-recoveries or subsidy arising out of selling fuel at below market price. The same subsidy sharing in some form is being brought back, they said.
ONGC Chairman and Managing Director Shashi Shanker, before the news of meeting came to light, said that the company has not heard anything from the government on subsidy sharing.
Petrol and diesel prices have in the last two days have been cut by 8 paisa and 6 paisa a litre, and the government is keen to show a visible reduction which can be possible only if retailers are subsidised. In the previous subsidy sharing scheme, ONGC sold oil to refiners at a discount.