05 September 2005

Proposals But Before the Prime Minister Shri Manmohan Singh by CPI(M) General Secretary, Prakash Karat,  and Polit Bureau Member, Sitaram Yechury when they met him today.

Steps to Reduce Impact of Price Rise

·        Suspend Road Cess Increase :  Government increased the road cess by Rs. 0.50/litre for petrol and diesel from March 2005.  This amount may be suspended till international oil prices return to reasonable levels, or till the end of 2005-06. 

Amount available : about Rs. 1500 crore for 6 months

·        Forgo Increased Customs Duty : Government has been indicating that the crude prices have risen from $ 40/bbl (when the budgetary projection were made February 2005) to $ 60/bbl, a 50% increase.  The increase in customs duty, therefore, may be foregone.

Amount Available : This would make available about Rs. 3,300 crores

·        Forgo Increased Excise Duty : Government should forgo increase in excise duty, due to higher prices, as it cannot make profit out of an abnormally high international oil price scenario. In additional, excise duty may be frozen at current level so that when price is increased no part accrues to the government. 

Amount Available: About Rs 1000 crore

·        Make additional crude cess available for stablisation fund:  NDA government had raised cess on domestic crude from Rs. 900/MT to Rs 1800/MT in 2002.  The incremental cess of Rs. 900/MT should be used for stabilisation fund.

Amount Available : About Rs. 2700 crore

·        Duty free benefit for exports should be suspended:  While we had advocated this idea many months ago, no action has been taken.  Now, China, has withdrawn export benefits for its refineries for petroleum products such as petrol and naphtha. The export benefit should be immediately withdrawn.

Amount Available : About Rs. 2000 crore

·        Review and withdraw sales tax concessions to private refineries:  Tax concessions are no longer required to sustain  or support private refinery operation. Profit of RIL jumped to Rs. 7572 crores in 2004-05 from Rs 5160 crores in 2003-04. Obviously, a company that earns so much does not need any state support whatsoever.  Therefore all benefits such as sales tax deferment and export benefits must be immediately withdrawn, as they have not only more than served their purpose but could be better used in meeting needs of the people/developing state infrastructure otherwise.

·        Recover Unpaid Excise Duty From RIL : Newspapers have reported that Reliance Industries Ltd (RIL) has been served a show-cause notice by the Central Excise Department regarding non-payment of additional excise  duty to the tune of Rs. 10,500 crore on export of petroleum products from its refinery at Jamnagar in Gujarat.  The amount should be recovered and used for  absorbing the international price rise.

·        Total amount available: With the above about Rs. 21,000 crores without considering sales tax concessions.