Petrol duty cut will hit welfare schemes: Nitin

The BJP cannot afford to cut excise on petrol; to do so would be to jeopardise most of its welfare schemes which subsist on government subsidies.

Speaking to a mainline newspaper, Union Minister for Roads and Highways Nitin Gadkari has even sounded a note of caution in this regard.

He said that any subsidies for petrol and diesel would result in the diversion of funds from social welfare schemes. In this context, he specifically mentioned health insurance,

irrigation, free LPG and the Mudra loan scheme for small businesses. All these are pet schemes of PM Modi and there is no question of pulling the plug on them in the run-up to the general election. In other words, excise duties on fuel cannot be cut as they help fund a lot of government programmes.

“This is an unavoidable economic situation. It is directly linked to the global economy. If we have to sell it (petrol/diesel) cheap, it means we will have to buy it at a higher price and subsidise it here,” Gadkari said in an interview. “If we subsidise that, all the money from our social security schemes will vanish,” he said.

Yet, as Union Oil Minister Dharmendra Pradhan indicated on Thursday, the Centre is mulling an "immediate solution" to deal with the situation.

One of the short-term measures that the government is looking at is asking the State-owned ONGC to sell its fuel below the current global price. At the same time, the government will ask dealers and distributors to reduce their commissions. (ONGC accounts for nearly 70% of India’s domestic oil production and supplies to all major state-owned refiners).