While products like kerosene, naphtha and LPG will be under the ambit of GST, five items — crude oil, natural gas, aviation fuel, diesel and petrol — have been excluded from the basket for the initial years.
Record exports from China and India are pressuring the margins downwards despite firm demand for air travel, the sources said.
With global market signals confusing and Indian markets perched at uncomfortable highs, investors are seeking the safe haven of quality.
"Kerosene in some parts of the country is used as fuel, and in many parts... is misused. There is a huge amount of diversion... So, states are making efforts to become kerosene free because of a lot of diversion taking place," he said at an event of the Observer Research Foundation here today.
India's crude oil imports touched 7-year high in August as oil companies stepped up purchases to meet galloping domestic fuel demand.
Buoyed by the initial success of Direct Benefit Transfer, government plans to double the number of schemes under DBT to 147 by March and has launched pilots for paying subsidy on food, kerosene and fertiliser directly via bank accounts of beneficiaries, a top official has said.
In an interview with CNBC-TV18, MK Surana, CMD of HPCL said that the first quarter GRM does not include inventory gains.
A subsidised 14.2-kg cylinder will now cost Rs 423.09 in Delhi as against Rs 421.16 previously, according to state- owned oil firms.
RS Sharma, CMD, ONGC is very happy with the government's announcement of hike in kerosene price, which will help reduce the subsidy burden of these companies.
Prayesh Jain of IIFL tells CNBC-TV18 why the kerosene price increase augurs well for ONGC and Oil India and his take on Tata Motors post Brexit.
Retail prices of kerosene have been increased by 25 paise per litre as of now and J Ramaswamy, Director Finance of HPCL is hopeful the government will take the right pricing action in future as well.
The hike was long due and will be positive for upstream and oil marketing companies (OMCs) like Oil and Natural Gas Corporation, says RS Sharma, Former CMD, ONGC.
Kerosene sold to non-ration card segment outside the subsidised public distribution system (PDS) will cost Rs 49,109.05 per kilolitre (kl) or Rs 49.1 a litre in Delhi as against Rs 46,172.13 per kl previously.
Diesel demand, which soared 7.5 percent to 74.6 million tonnes last fiscal, is projected to further go up by 7.7 percent to 78.11 million tonnes.
"Fitch equalises IOC's rating with that of its largest shareholder, the state of India (BBB-/Stable) due to their strong operational and strategic linkages," the credit rating agency said in a statement.
The report has been prepared after examining nine areas of expenditure management â€” including issues related to fertiliser subsidy, Direct Benefit Transfer (DBT), removal of cesses, among others
The central and state governments subsidise a wide range of products â€” including rice, wheat, pulses, sugar, kerosene, LPG, naphtha, water, electricity, fertiliser, iron ore, railways, among others â€” in order to make these affordable.
As per a new fuel subsidy sharing formula approved last year, upstream firms Oil and Natural Gas Corp (ONGC) and OIL have to make good any revenue loss incurred by fuel retailers on selling kerosene through PDS and domestic LPG after taking into account the fixed subsidy provided by the government.
India's food subsidy for 2015-16 was estimated at around Rs 1.24 trillion. The government believes food subsidy savings through DBT will be much higher than that for LPG. To put things into perspective, the government hopes to save Rs 15000 crore in LPG subsidy leakages every year
The proposed DBT scheme can result in an estimated 30-40 percent savings annually on kerosene under-recoveries if implemented nationally, ratings agency Icra said in a note.
The government last night said it will roll out Direct Benefit Transfer (DBT) for kerosene from April 1 where the users will buy the cooking fuel at market rate but will get financial support directly in their bank accounts.
However, the court has reiterated that people without Aadhar can not be placed in a disadvantageous position.
Kerosene through public distribution system (PDS) is sold at Rs 14.96 per litre against the actual cost of Rs 29.91.
The Finance Ministry will pay state-owned fuel retailers Rs 1,300 crore cash subsidy for kerosene for the first quarter ended June 30, but the same on LPG will be decided later.
Government has decided to cap the subsidy payout on kerosene at Rs 12 per litre but rates will not increase as upstream firms like ONGC will be asked to pay Rs 5,000-6,000 crore to maintain retail prices at the current level.