Basically the Finance Ministry has reacted too slowly and irresponsibly.
All along it was clear that duties being advalorem the Government was making more money on imports.
Import or crude attracts 5% duty.
When the price was US $ 35 per barrel the amount of customs duty the Government earned was Rs. 70 per barrel. ( US $ 35 @ Rs. 40 = Rs. 1400 X 5% = Rs. 70 per barrel ).
Now the price is US$ 130 which is Rs. 5400 assuming same exchange rate of Rs. 40 ( actually it is now Rs.43 hence Government earns more, 15% more to be precise ). On Rs. 5400 a 5% duty means Rs. 270 per barrel. Which means customs duty earnings has gone up by 285% !!!! All this increased revenue has been reflected in loss for the oil marketing companies. Hence it is a misnomer. The reality is Government could have actually controlled the price line by eiminating customs duty.
Besides there are other measures that could have been adopted. AT LEAST THEY CAN BE ADOPTED NOW. - Elimination of sales tax at retail point. - Increased use of ethanol in fuel mix. - Increased spending in development of solar products. - Increased R&D in development of cars with battery power. This should be capable of more HP and speed.
Of course, as somebody has pointed out in this forum, we all have consciously reduce fuel usage.
