The Hindu : National : Chidambaram package today to contain oil prices

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Wednesday, Aug 18, 2004

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Chidambaram package today to contain oil prices

By Our Special Correspondent

NEW DELHI, AUG. 17. The Union Finance Minister, P. Chidambaram, will announce in Parliament tomorrow a package of fiscal measures, including cuts in duties on petroleum products, to tackle the rise in oil prices, the Parliamentary Affairs Minister, Ghulam Nabi Azad, said today.

The proposals being considered include cuts in both excise and customs duty on petroleum products such as petrol, diesel, LPG and kerosene. In recent years, the country has not needed to import products and instead has been buying crude oil from abroad for its refineries. Thus, a cut in customs duty on these products is only notional since these are not being imported. The oil companies include the customs duty as a component of their costs but it is calculated on the basis of the crude oil required for the extraction of products.

Revenue collections

Even so, a cut in duties will affect revenue collections and the Finance Ministry has also been looking for other ways to ensure that the high world oil prices are not translated into an increase in the prices of products such as petrol and diesel. These include cuts in State Government levies on such products which are as high as 30 per cent in several States.

The National Security Adviser, J.N. Dixit, meanwhile, is believed to have held a meeting with the Petroleum Secretary, R.C. Tripathi, and the Indian Oil Corporation chairman, M.S. Ramachandran, on energy security issues.

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