Monday, April 25 2005 20:09 Hrs (IST) - World Time -

New Delhi: Finance Minister P Chidambaram today (Apr 25, 2005) rejected a cut in duties on petroleum products to avoid an inevitable hike in petrol and diesel prices.

Petroleum Minister Mani Shankar Aiyar, who had a 50 minute meeting with the Finance Minister on the issue of auto fuel pricing, will now meet Left parties to arrive at a consensus on raising petrol and diesel prices in line with the rising trend in global crude oil prices.

Aiyar made out a case that the Budget for 2005-06 had necessitated a Rs 2.52 per litre hike in petrol and Rs 1.65 a litre increase in diesel prices and this hike should be rolled back to give customers comfort, Oil Ministry officials said.

Together with duty changes, the increased global oil prices warrant Rs 4.59 a litre increase in petrol and Rs 5.18 per litre hike in diesel prices.

Chidambaram, however, said that the hike in duty on petrol and diesel was neutralised by the lowering of tax rates on domestic Liquefied Petroleum Gas (LPG) and PDS kerosene and the whole exercise was revenue neutral.

The Rs 3,000 crore additional revenues to the Centre this fiscal were from the increase in cess for road development to Rs 2 per litre from Rs 1.50 a litre and surpluses on this count will accrue to the Central Road Fund, officials said.

"I am more than convinced that the Budget proposals are indeed revenue neutral," Aiyar told reporters after his meeting with Chidambaram.

He said that it has to be examined if the increased cess is to be passed on to customers.

"I will meet Left party leaders and other allies on the issue," he said without elaborating.

The consensus arrived at the deliberations would be placed before the Cabinet for approval.