Date:07/09/2005 URL: http://www.thehindu.com/2005/09/07/stories/2005090705021600.htm

Business

Industry supports hike in petroproduct prices

Special Correspondent

`Take hydrocarbon pricing out of political arena'

NEW DELHI: The apex trade and industry bodies reacted differently to the latest hike in prices of petrol and diesel even as there was agreement that such revision was inevitable.

While accepting the inevitability of an increase in and diesel prices announced by the Union Minister of Petroleum, the Confederation of Indian Industry (CII) urged the government to take the whole issue of hydrocarbon pricing out of the political arena. For this, there was need only to implement the policy already on the government's statute books to dismantle the administered oil price regime and let the market determine the price of all finished products in the petroleum sector. Provisions could be made in the policy to make kerosene available at affordable prices to the poorer sections of consumers in a manner that minimises leakages.

The present environment of rising oil prices required that the entire tax structure in the hydrocarbon sector needed to be re-examined and rationalised as the industry could not compete internationally if it had to continue bearing a nearly 50 per cent tax burden on fuel costs which was for example almost three times the tax burden borne by Chinese exporting firms.

Reacting on the hike in petroleum and diesel prices, the Associated Chambers of Commerce and Industry of India (Assocham) President, Mahendra K. Sanghi, said it had been nominal and was long overdue in view of skyrocketing rise in crude oil prices internationally.

The PHDCCI chief, K. N. Memani, has pointed out that apart from industry and agriculture, the services sector, notably transport industry, has emerged as the largest consumer of petrol and diesel. Hence an across the board hike in prices will have a cascading effect on the economy and can fuel inflation.