As per the information given by the former planning commission member Kirit Parikh, the price of petrol and diesel could be slashed down without hurting revenues.
As oil prices surged up to $85 per barrel this year, Parikh suggested that fuel prices can still be brought down by Rs 5-6. According to him, the states’ annual revenue would increase by 10% to 16.5% depending on the movement by both crude oil price and rupee. Even at oil being traded at $70 a barrel, states would continue to collect Rs 20,000 crore more than expected. He suggested that states could cut fuel prices by Rs 1.5 per litre without any adverse impact on the revenue.
If a balanced approach is taken, the total cut could be up to Rs 5-6 per litre. “The central government collected around Rs 2,29,000 crore from excise on petroleum products in 2017-18. If the excise duty rates are reduced by 10 per cent, that is, from Rs 19.48 per litre of petrol to Rs 17.50 and from Rs 17.24 per litre of diesel to Rs 15.50, the drop in revenue would be Rs 22,900 crore,” Parikh wrote in the national daily.
To offset the loss of Rs 22,900 crore, Parikh suggested that the government can increase the Goods and Services Tax slabs from 5% to 5.2%, from 12% to 12.48% and from 28% to 29.12%.