Amid rising concerns that the government was not fully passing on the ensuing benefits of the drastic fall in crude prices to the consumers, Finance Minister Arun Jaitley has said that the savings are being used for developing infrastructure to push growth and create jobs, besides enabling oil marketing companies meet their losses that once stood at Rs. 30,000 crore.
The minister while replying to a query in parliament for not reducing prices of petrol and diesel, in proportion to the fall in crude prices in the international market, elaborated that the benefit of reduction in crude oil has been divided into three portions. One goes to public sector oil marketing companies. These oil companies make future purchases of crude oil and they had incurred losses. He added that these oil companies were sitting on Rs 30,000 crore loss and that couldn't have been met by increasing income tax or any other tax. So, naturally oil companies -- which decide the price in the market -- would wipe off their losses first.
Jaitley further said that many states have also hiked VAT (Value Added Tax) levied on fuel and such proceeds are used for public purpose only. Whatever has come to the central government is a small portion of excise or cess, and the government has spent a portion of that in infrastructure because spending on infrastructure helps in creating more jobs and pushes growth.