New Delhi: Government on Wednesday said oil subsidy bill will go up this year if global crude oil prices rise above the current levels of $90 a barrel but asserted fiscal deficit will remain at 5.5% of GDP as projected in the budget.
“If global crude prices rise (further), oil subsidies will increase,” finance secretary Ashok Chawla told reporters.
The government had in 2009-10 doled out Rs26,000 crore to make up for more than half of the revenue loss of state retailers due to selling auto and cooking fuel below imported cost.
This year, it has already committed to giving Rs13,000 crore out of the Rs31,367 crore revenues state retailers lost on selling diesel, domestic LPG and kerosene below cost.
At current price levels, Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp are projected to lose Rs68,361 crore and oil ministry expects at least half of them to be made up by the finance ministry.
The three retailers currently sell diesel at a loss of Rs6.09 per litre, kerosene at Rs17.72 per litre loss and LPG at a loss of Rs272.19 per 14.2-kg cylinder.
Last month the finance ministry had indicated it would seek Parliament nod for the Rs13,000 crore already sanctioned towards oil subsidies in the Budget session.
Oil prices have risen as freezing weather in the northern hemisphere has increased energy demand for heating.
The spurt has resulted in the difference between domestic retail and international benchmark prices widening.
While the government deregulated petrol prices in June this year, state-owned firms continue to sell diesel, domestic LPG and kerosene below cost to keep inflation in check.
Chawla, however, was confident of maintaining the fiscal deficit at the projected 5.5% of GDP.
Asked if the government may consider lowering import and customs duty on crude oil and petroleum product to narrow the difference between retail price and imported cost, he said: “At this point of time, there is no thinking or discussion on that.”
A cut in duties would also mean lower subsidy outgo. Chawla further said all these issues on what would be the duty structure would be considered in the run-up to the budget adding if some action is to be taken it would be through finance minister in his budget speech.
Of the Rs31,367 crore revenue loss in April-September, upstream firms account for Rs10,456 crore.