The Union government on 24 June 2011 decided to increase the price of diesel by Rs. 3 a litre, kerosene by Rs. 2 a litre and domestic LPG by Rs.50 a cylinder. The government also slashed the Customs duty on crude oil and all other petroleum products by five percentage points. The excise duty on diesel was reduced from Rs. 4.60 a litre to Rs. 2 a litre. As a result of the government decisions a revenue loss of Rs Rs.49,000 crore was entailed.
The hike in the prices of the three commodities will lead to a revenue gain of Rs. 21000 crore to the oil marketing companies (OMCs), that are currently suffering huge under-recoveries that are being projected at Rs.170140 crore in 2011-12. The under-recoveries will now come down to Rs.1.20 lakh crore.
The Trinamool Congress had opposed any increase in the prices of petroleum products, especially those of kerosene and LPG.
However Pranab Mukherjee described the increase in fuel prices as modest. Mukherjee expressed the hope that the State governments would reduce their taxes to provide relief to consumers.
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