The government is expected to take necessary steps this week to address the rise in oil prices, a government official said on Tuesday.
“Rising oil prices is a crisis situation and consumers expect the government to give the relief," the official said.
The official's comment came after Union Oil and Petroleum Minister Dharmendra Pradhan on Monday said that the country is looking at ways to keep rising fuel prices in check.
"Various alternatives are being looked at," Pradhan said in a televised speech, adding that he would "work out something soon".
Though the government assured relief from fuel price hikes, the move could be tricky.
Finance ministry officials said it was too early in the year to cut excise on petrol and diesel, and added that concerns including .
Maintaining high revenue collections would be a key factor in the decision to cut excise on fuels, the officials said and added the government was firm on sticking to its fiscal deficit target of 3.3% for the financial year 2019.
The officials further added that the ministry was unsure of the quantum of excise cuts necessary, given the uncertainty in the movement of global oil prices.
A Re 1 cut in excise on petrol and diesel costs the government about Rs 14,000 crore in one financial year, the officials added.
BJP president Amit Shah said the petroleum minister would have a meeting with officials from the oil companies on Wednesday. The government was looking to work out a formula to reduce the prices, he added.
The price of Brent Crude oil had crossed $80 a barrel and is now trading at $79 per barrel.
Fuel prices in India on Monday touched a record high, with petrol prices hitting Rs 76.24 per litre in the capital, while diesel climbed to its highest ever level of Rs 67.57.
According to the official, the measures will have to be taken together to mitigate the impact of a falling rupees and rising crude prices.
The petroleum ministry is keenly following the issue, said the official, and added that the government would have to consider the impact of the excise cut.
Officials urged state governments to reduce the value added tax (VAT) if the centre cut the excise duty.
Global rating agency Moody's on Tuesday said that they are expecting the government to ask the state-owned oil companies, Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Limited (OIL) to share the country’s fuel-subsidy burden.
First Published: IST