New Delhi: Finance Minister P Chidambaram today (Aug 18, 2004) said that cut in duties on petroleum products would help check prices and avert any burden on consumers, while hoping that global oil prices would decline.

"We have decided to make reduction in customs and excise duties and I hope that (international) crude price will decline," Chidambaram told reporters after announcing duty cuts in Parliament.

"What we have done is to avoid any burden on consumers. We have avoided any rise in prices of petroleum products by reducing the duties," he said.

The cut in excise and customs duties on petroleum products were effected, taking into account the surge in prices of petroleum in international market.

"It is completely unanticipated," he said, adding that it would have impacted the economy if the duties were not rationalised.

The Finance Minister hoped that the combined effect of duty cuts, rise in import prices of crude and the selling prices would result in certain increase in revenue.

Asked if refinery margins would be hit after the duty cuts, Chidambaram said there would be "some pressure" on margins of oil companies but there was a view that refinery margins in India were perhaps "too generous".

According to industry sources, the oil refiners are likely to take a hit of Rs 5,350 crore with IOC expected to be the worst hit.

Reliance Industries is likely to take a hit of Rs 450 crore, sources said.