Zee Media Bureau
New Delhi: The price of sugar may go up after the Centre decided to increase import duty on it. Also, the government is mulling an increase in natural gas prices.
The government's decision to increase the import duty on sugar to 40 percent from the current 15 percent is seen as an attempt woo sugar cane farmers in Maharashtra ahead of the assembly elections.
The government says the move will improve the financial health of the sugar industry but it may end up pushing up price of the sweetener by Rs 2-3 a kg for consumers. Also, there are indications that natural gas will become dearer.
Hectic top-level parleys are on in the government as PM Narendra Modi sought to hammer out a more palatable increase in natural gas prices that would boost production and not impose a heavy burden on consumers.
Finance Minister Arun Jaitley and Oil Minister Dharmendra Pradhan, met Prime Minister Narendra Modi twice in as many days to discuss possible tweaks to the Rangarajan price formula, under which the price of gas would rise to USD 8.8 from July from USD 4.2 currently.Sources said the new government was looking at making some changes in the previous United Progressive Alliance-government approved Rangarajan price formula, which will result in a steep rise in the prices of electricity, urea, CNG and piped cooking gas.
While the new government is keen to take an early decision, it doesn't want to add to already high inflation, which may accelerate due to a below-normal monsoon and a spike in oil prices in the aftermath of the Iraq crisis.
Every dollar increase in gas price will lead to a Rs 1,370 per ton rise in urea production cost and a 45 paise per unit increase in electricity tariff. There would be a minimum Rs 2.81 per kg increase in CNG price and a Rs 1.89 per standard cubic metre hike in piped cooking gas.
If the Rangarajan formula is implemented without changes, power tariff will rise by about Rs 2 per unit and CNG rates will jump by over Rs 12 per kg in Delhi.
First Published: Tuesday, June 24, 2014, 07:22