Petrol prices spell windfall for govt

NEW DELHI: At a time when the government is arguing that “under-recoveries” for oil companies is forcing upward revision in petrol prices, its own coffers have seen windfall gains from taxes on high prices. Indirect taxes on petroleum fetched the exchequer Rs 1 lakh crore in 2010-11, a jump of 43% or over Rs 30,000 crore from the previous year.
That’s not all. The government’s earnings from dividends and royalty payouts as well as profit petroleum from private oil contractors was a sizeable Rs 20,000 crore in the fiscal ending March 31, 2011.
After the last hike on November 3, 2011, the petroleum ministry had said, “It is entirely misleading to calculate profit of oil companies based on the quotes of international crude and product prices of a few days.” It also pointed out that the companies were expected to lose Rs 1,32,000 crore during the current financial year, or 26% of India’s oil import bill.
Similar arguments have been put forward before and after every hike. But the rise in dividend payout of 13% in 2010-11 by the state-controlled oil companies over the previous year reveals a much better performance than most other corporate houses, particularly in a year when industry has been going through a global financial turmoil and slowdown.
After the recent hike in petrol price, the government had blamed the increase on the global situation, a “problem beyond control of the government”. The rise in international crude prices and a devalued Indian rupee had led to a hefty oil import bill, it had said.
However, against the claim that the oil companies and the government were sharing the burden of an abnormal hike in international crude prices, the income generated through indirect tax collections paints a different picture.
The government’s earnings through royalty, dividends and profit sharing have been steadily rising over the years. They have risen by 32% in 2010-11 compared to 2008-09.
The government had in June cut duties to give some relief to the common man by reducing import duty on petrol and diesel from 7.5% to 2.5% while doing away with customs duty of 5% on crude oil. The excise duty on diesel was reduced by Rs 2.60 to Rs 2 per litre.
Total Indirect Taxes from Petroleum
----------------------2008-09-------------2009-10--------2010-11
Customs-----------11,174-------------7,755--------------26,281
Excise-------------59,383------------64,012--------------76,546
Total--------------70,557------------71,766-------------1,02,827
Royalty, dividends, profits shared with govt
----------------------2008-09-------------2009-10--------2010-11
Royalty------------3,289-----------------4,266------------4,977
Profit petroleum-5,035-----------------5,926------------3,610
Dividend-----------7,008----------------7,669-----------11,654
Total--------------15,333---------------17,861-----------20,240
Note: figures in Rs crore; Source: finance ministry