Guangzhou, Jun 4 (UNI) Terming the price hike of petroleum products ''a step taken out of compulsion'' External Affairs Minister Pranab Mukherjee today admitted it would increase inflation and the woes of the people.
Mr Mukherjee, who is on a tour of China, suggested a way to deal with the situation wherein the state governments should reduce sales tax on petroleum products, which earn them Rs 55 thousand crore.
He said the government had to increase the prices as cost of crude had crossed the 130-dollar-a-barrel mark. The government had tried to alleviate the losses suffered by oil companies by removing custom duties on them. However, now it was compelled to take a harsh decision, he said.
He said despite this increase, the government was providing huge subsidies, without which the cost of LPG would have spiralled beyond Rs 630 per cylinder. Mr Mukherjee said the government was still subsidising petrol and kerosene by Rs 15 to Rs 17 and Rs 37 respectively.
He said if the state governments were to reduce the sales tax then it would greatly benefit oil companies and the people.
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