State-run oil marketing companies -- IndianOil, Bharat Petroleum and Hindustan Petroleum -- are incurring a daily loss of Rs 271 crore (Rs 2.71 billion).
These firms are expected to incur an under-recovery of over Rs 121,000 crore (Rs 1,210 billion) during this financial year, compared to Rs 78,000 crore (Rs 780 billion) in 2010-11.
Addressing a meeting of the Consultative Committee of Parliamentarians attached to his ministry in Mumbai on Monday, petroleum minister Jaipal Reddy said the exchange rate, which was Rs 46 per dollar at the beginning of September, was hovering around Rs 49.
"Weakening by every Rs 1 impacts the cost of diesel, PDS (public distribution system) kerosene and domestic LPG (liquefied petroleum gas) by Rs 8,000 crore (Rs 80 billion) per annum," he said.
These companies are losing Rs 6.90 on every litre of diesel, Rs 24.63 per litre of kerosene, and Rs 270 on each domestic LPG cylinder.
The average price of the Indian basket of crude oil, which was $69.76 per barrel in 2009-10, has shot up to $111.
"To minimise the burden of rise in international prices on consumers, the government has eliminated the customs duty on crude oil and reduced customs duty on petroleum products by five per cent. The excise duty on diesel has also been reduced by Rs 2.60 per litre," he said.
The government has underestimated its petroleum subsidy bill for this financial year at Rs 23,640 crore (Rs 236.4 billion).
It has already exhausted the sum, by paying subsidy for the last financial year.
With revenue under pressure and gross domestic product growth expected to be lower than nine per cent, any fresh provisioning for oil subsidy will hit the fiscal deficit target that has been set at 4.6 per cent of gross domestic product.
