Government tries to distance itself from hike as Trinamool demands rollback and CPI(M) describes it as a callous step
New Delhi: Responding to the resentment expressed over the yesterday’s hike in petrol prices, the government today distanced itself from the decision, saying the call was taken by oil marketing firms.
"So far as petrol prices is concerned, petrol has been deregulated. It is oil marketing companies' review," union finance minister Pranab Mukherjee said when asked about the Rs3.14 per litre hike announced by the oil companies last evening.
Mr Mukherjee was talking to journalists after a function this morning in the national capital to launch the book “Land of Two Rivers”, by Nitish Sengupta.
On Thursday, state-owned oil companies hiked petrol prices, explaining that depreciation of the rupee had increased the cost of crude oil imports. This is the second major hike in four months. In May, the price of petrol was increased by Rs5 a litre, PTI reports.
UPA ally Trinamool Congress has already demanded a rollback of the petrol price hike, whereas the CPI(M) said it was a "callous" decision and it demanded restoration of the administrative regulation of petrol pricing. The CPI(M) said the petrol price hike would have a cascading effect on price rise.
The RBI in its monetary policy review today said the petrol price hike would push WPI inflation up by seven basis points and would have a cascading effect.
Petrol prices were freed from government control in June last year.
Industry sources said the reduction amounts to withdrawal of the stimulus package given in 2008-09 after the global financial crisis. The DEPB rates were revised upward as a stimulus in view of the slowdown in demand
New Delhi: As a setback to exporters, shipments of 1,100 items will be entitled to lower tax refunds from 1st October when curtains draw on the popular Duty Entitlement Pass Book (DEPB) scheme, reports PTI.
On export of these items, the tax refunds would be reduced by 1%-3%, finance secretary RS Gujral said while unveiling the transitory scheme for the DEPB scheme.
“As a transitory arrangement, these items will suffer a modest reduction in the existing DEPB rate to the extent of 1%-3%...” he said.
Industry sources said the reduction amounts to withdrawal of the stimulus package given in 2008-09 after the global financial crisis. The DEPB rates were revised upward as a stimulus, they said.
Since tax incentives for these goods will now be available under the Duty Drawback Scheme (DDS), the total number of items under the DDS would increase to about 4,000 from present 2,835.
While different avenues are available to exporters for refund of the duties, the DEPB is the most preferred route for its flexibility and attractive rates which average about 8%.
The government had spent Rs8,700 crore last year on DEPB refunds and engineering, chemical, pharma, textile and marine products have been the major beneficiaries.
With the withdrawal of the DEPB scheme, the government’s revenue forgone will be less, CBEC SD Majumdar said.
Since the DEPB scheme will not continue beyond 30th September, it has been decided to provide a smooth transition for these items (mainly engineering, chemical, pharma, textile and marine) while incorporating these in the drawback schedule.
Besides, the tax refunds for the items already under the DDS have also been reduced.
“The reduction is mainly on account of the reduction in basic customs duty on crude petroleum from 5% to nil as well as a reduction in central excise duty on diesel from Rs4.4 per litre to Rs2.4 per litre,” he said.
Of the 1,100 being shifted to DDS, there would be a ceiling of 5.5% tax refund rate on 660 items. However, the ceiling would not apply to 340 items including worsted woollen yarn, blanket, nylon twine, cut polished chat stones and polyester metallised film.
Though exports have shown a remarkable performance, growing by 54.2% between April-August 2011 to $134.5 billion, there are concerns that the momentum may not be sustained in the wake of increasing economic problems in the US and Europe.
Pranab Mukherjee hopes inflation reduces soon, leaving scope for growth in second half of fiscal
New Delhi: Union finance minister Pranab Mukherjee today said that the interest rate hike by the Reserve Bank of India (RBI) will help moderate inflation to a comfortable level without hurting growth.
“I am hopeful that the measures taken (by RBI) would get us back to a more comfortable inflation situation earlier rather than later... while (leaving) scope for growth to pick up in the second half of the year,” Mr Mukherjee told journalists.
The RBI today hiked interest rates by 25 basis points at its mid-quarter policy review which will make credit for business and retail loans costlier. This is the 12th time since March 2010 that the Bank has hiked rates in its continuing effort to curb inflation, PTI reports.
“Today's step is consistent with the RBI's monetary stance for the first half of 2011-12 and overall concern on growth sustainability in the medium term,” Mr Mukherjee said.
The RBI said in a statement after its review meeting that inflation would continue to be the guiding factor on deciding monetary policy and it projected a March-end inflation of 7%.
According to the central bank, inflation would cool only in the later part of the financial year. Overall inflation was 9.78% in August, up from 9.22% in July, which is way above the central bank’s comfort level of 4% to 4.5%.
In the context of mixed data on the state of the economy, Mr Mukherjee said headline inflation, which is above 9% over the past 12 months, continues to be a matter of concern.
“There are signs of growth (getting) affected by monetary tightening in recent days,” he said.
Industrial production fell to a 21-month low of 3.3% in July. The country’s GDP growth also slipped to an 18-month low of 7.7% in the April-June period.