Oil Prices Make PM Modi, Jaitley, Pradhan Go in a Huddle Again; OMCs to Not Subsidise Prices Further

New Delhi: Despite the Centre deciding to slash prices of petrol and diesel by Rs 2.50 a litre, retail rates of fuel in India have been going up. Taking cognisance of the same, Prime Minister Narendra Modi, Finance Minister Arun Jaitley and Petroleum Minister Dharmendra Pradhan met again on Friday to deliberate on possible measures to curb rates.

One of the decisions that has come out of the meeting is that oil marketing companies (OMCs) will not be asked to subsidise the fuel prices any further.

On October 4, the Centre announced a cut of Rs 2.50 per litre for petrol and diesel prices, saying Rs 1.50 per litre of excise duty cut would be borne by it while the remaining Re 1 per litre cut would be absorbed by the oil marketing companies. Announcing the reduction, Jaitley appealed to state governments to match the Centre’s cut in fuel prices so that the total price cut would be Rs 5 per litre.

The decision to cut excise duty by Rs 1.50 per litre, Jaitley said, would cost the Centre Rs 10,500 crore this financial year.

The move also comes at a time when the Rabi crop season is fast approaching. As the cropping season arrives, use of diesel spikes as irrigation and other machine-led practices are diesel-fueled. The Rabi cropping season is from October-March.

The Union Cabinet had last Wednesday approved a proposal to hike the minimum support price (MSP) for Rabi crops.

The Centre announced a 6 percent hike in wheat support price to Rs 1,840 per quintal and up to 21 percent increase in other Rabi crops, a move that will give farmers Rs 62,635 crore additional income and help contain their simmering discontent over high input cost and low returns.

MSP is a price at which the government buys crops from the farmers.

Rising fuel costs, especially during the cropping season, raises the cost of transporting labour that negatively affects the already skinny margins.

Consequently, cost of transporting produce such as vegetables also hikes.