The finance ministry has refused to cut duties on petroleum products, a demand made by the Left parties to defuse the current oil crisis.
Such a move would have provided a cushion to the public sector oil marketing companies and prevented any significant hike in retail prices.
According to government sources, finance minister P Chidambaram virtually rejected the idea of duty cuts during a meeting with petroleum minister Murli Deora on the grounds that the government cannot cut its revenue stream.
Deora is learnt to have told Chidambaram that the oil firms could lose Rs 73,512 crore (Rs 735.12 billion) in revenue this fiscal if the price of petrol is not raised by Rs 9.33 per litre, diesel by Rs 10.43 per a litre and LPG by Rs 114.45 per cylinder.
Deora, however, told Chidambaram that the petroleum ministry was against any increase in kerosene and domestic cooking
gas prices.
Deora is now slated to meet Prime Minister Manmohan Singh on Monday on the matter.
Earlier in the day, a finance ministry official said there was need for caution on the matter. Global crude prices have risen around 20 percent since 2006, but retail prices have been frozen to prevent inflationary pressures.
'There is no hurry to raise the domestic fuel prices. There are reasons to be cautious and careful. The decision to hike prices will be cool and balanced. The interest of the common man will be protected. A price shock will be avoided', he added.
The official said said lowering duties on petroleum products would have to be balanced by a cut in government spending.
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