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States banking on fuel levies to see higher prices

The changes are a reaction to a series of surcharges and levies

Written by ENS Economic Bureau | New Delhi |
July 26, 2012 12:48:35 am

Price of cooking gas shot up in Uttar Pradesh,Maharashtra,Bihar and Assam as oil marketing companies revised their prices in tandem with state specific surcharges,from Wednesday.

The worst hit will be Assam where along with cooking gas,prices of petrol,diesel and kerosene too have risen by hefty margins. Prices have risen,but less drastically across all the four products in Bihar and Uttar Pradesh too. In states like West Bengal the impact will be diluted as their cooking gas prices will come down but prices of both petrol and diesel will rise.

The changes are a reaction to a series of surcharges and levies like entry tax on crude that these states have been following since 2003 to shore up their budgets.

In turn,oil marketing companies were recovering them from the public as state surcharge,but at a fixed rate. While the states continued to build up the levies often bringing in new ones,the fixed rates charged by the oil companies meant under recovery crept in here too.

This has now been revised,rewarding basically the fiscally prudent states and hurting those who banked on the levies,more. Those where prices have come down include Karnataka,Goa,Gujarat and Orissa. The changes range from an increase of up to Rs 1.95 a litre and a reduction of up to 62 paise a litre in diesel retail prices,Indian Oil Corporation,India’ s largest public sector oil marketing company noted in a statement.

An official connected with the exercise said he was sure the empowered committee of state ministers on GST will not ask for any additional measures from the Centre to shield consumers in states where the price of petro-products have gone up. From now the scheme will be reviewed on quarterly basis by the oil companies and the required changes will be made in the state specific costs,the IOC statement added.

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