Finance minister Pranab Mukherjee said that the Rs49,000 crore shortfall in the government's revenue on account of reduction in duties on crude oil and related products would be made good by buoyancy in tax collection and improved compliance
Washington: Ruling out any rollback of the recent hike in prices of petroleum goods, finance minister Pranab Mukherjee today said the decision to cut duties would not impact the government's fiscal deficit, reports PTI.
"No. No question of revoking," he told PTI when asked whether there was any possibility of a part withdrawal of the hike in prices of diesel, cooking gas and kerosene announced by the government recently.
The finance minister was here to participate at the 'US-India Economic and Financial Partnership' jointly organised by the Confederation of Indian Industry (CII) and Brookings Institute, a Washington-based think-tank.
In view of the spiralling prices of crude oil in the international market, the government had increased the price of diesel by Rs3 per litre, cooking gas (LPG) by Rs50 per cylinder and kerosene by Rs2 per litre.
The government had also reduced excise and customs duties on crude oil and other goods, sacrificing annual revenue of Rs49,000 crore.
The hike in prices of petroleum goods led to protests in several parts of the country and many state governments announced the withdrawal of value added tax (VAT) on petroleum products to lessen the impact of the hike on the common man.
Referring to the impact of the duty reduction on the fiscal deficit of the central government, Mr Mukherjee said the shortfall would be made good by buoyancy in tax collection and improved compliance.
"I do not think so because this was the conscious decision... about Rs49,000 crore will be the shortfall in the duty. I think it would be possible for us to make it up through buoyancy and by better compliance," he said when asked about the impact of the duty cut on government finances.
The government proposes to bring the fiscal deficit down to 4.6% of the gross domestic product (GDP) in the current fiscal from 4.7% in 2010-11. It was as high as 6.3% in 2009-10.
Mr Mukherjee has already written to state chief ministers to look at the possibility of reducing the sales tax on petroleum products to reduce the impact of the price hike on the common man.