In the wake of 10-day relentless rise in petrol and diesel prices, the government has said that it is working on a long-term solution to deal with the volatility and frequent revisions in rates. Law and IT Minister Ravi Shankar Prasad has said that the issue of frequent hike in fuel price is a matter of debate and concern and the government is involved in this whole process, including the concern about rise in prices, and also the uncertainty. He added that with geopolitical situation leading to an uncertainty over the direction of international oil prices a new sense of urgency has developed.
Prasad also said that “The government is keen that instead of having an ad hoc measure, it may be desirable to have a long-term view which addresses not only the volatility but also takes care of the unnecessary ambiguity arising out of frequent ups and downs. That process is underway”. But, he refused to elaborate either on the measures being considered or if a duty reduction was on cards.
Talking about excise duty, the Minister said proceeds from such taxes are used for country's development including building of highways, digital infrastructure, electricity to villages, hospitals and education. So, he said that tax on fuel is linked with developmental issues. He further said that the government had allowed complete freedom on pricing and on many occasions prices went down considerably. There are indications that a cut in excise duty combined with states being asked to reduce VAT is on the cards.