Expect duty cut, marginal hike on diesel: Kirit Parikh

In an interview with CNBC-TV18, Kirit Parikh, Member of Planning Commission, said that a duty cut and marginal price hike on diesel prices is likely in Friday's Empowered Group of Ministers (EGoM) meet. "Diesel prices should be freed and the leftover subsidy must be freezed on per-litre basis to adjust the fuel cost in tandem with international prices," he adds.

Below is the verbatim transcript of his interview with Udayan Mukherjee. Also watch the accompanying video.  Q: How much of a duty cut are you expecting on diesel? Do you think the response on diesel is a combination of a duty cut and some price hike?
A: Yes, I would also expect not only a duty cut, but also some price increase. Further, freeing the price of diesel and freeze whatever is the subsidy left as a per litre subsidy so that afterwards no matter what price becomes the subsidy remains on a per litre basis. This will enable diesel prices to start adjusting to international prices. This would be my preferred solution or outcome of this meeting. Q: That is an ideal situation, which probably may not happen. It is more likely that we will see token price hike and probably some duty cut. Do you see substantial reduction on diesel prices duty cut on that Rs 4.6 per litre?
A: Yes. I think it will be reduced. The excise can be reduced substantially and some reduction in the crude customs duty can also take place. The customs duty was raised from 2.5% to 5% some time ago. At that time, it was said that government we will bring it down later on. I do expect that the customs duty on crude would be adjusted. there is a strong argument for reducing excise on diesel.Also read: Your fuel bill will stay same; Oil Min says no hike today Q: Everything is a tradeoff for the government- do you think it will lean towards taking the knock of lower revenues from these excise cuts so that inflation does not get stoked too much?
A: The diesel excise cut is not that much of a tradeoff. Whatever you are gaining by excise on diesel, you are losing it on the way of compensating under recoveries so that is no-brainer. Yes, reducing customs duty on crude oil would indeed have a larger impact on government