Govt hikes excise duty on petrol, diesel for a second time in two weeks
02 January 2016
The centre today announced an increase in excise duty on petrol and diesel to raise an expected additional revenue of Rs4,400 crore, including Rs4,300 crore on diesel and about Rs80 crore on petrol.
The government had on 17 December 2015 and on 15 November raised excise duty on the two auto fuels, to raise over Rs10,000 crore in the remaining months of the fiscal to reduce its budgetary deficit.
In its second increase in duties in just two weeks, the government today slapped an additional excise duty on petrol of Rs0.37 per litre and Rs2 a litre on diesel, to mop up nearly Rs4,400 crore.
There will, however, be no increase in retail selling price of petrol and diesel as state-owned oil marketing firms have left enough margin to absorb the bury hike despite the 1 January reduction in fuel prices.
With the latest duty hike, the basic excise duty on unbranded petrol will go up from Rs7.36 per litre to Rs7.73 and that on unbranded diesel from Rs5.83 to Rs7.83 per litre, the Central Board of Excise and Customs (CBEC) stated in a notification.
Although the two hikes in excise duty over the past two weeks have not affected the consumer, these have deprived the consumer of savings on spending through further easing of retail fuel prices.
The Indian consumer has not fully benefited from a nearly 70 per cent fall in international prices of crude oil
The government had on 17 December raised excise duty on petrol by Rs0.30 per litre and Rs1.17 a litre on diesel to garner Rs2,500 crore. And, on 7 November 2015, the government had raised excise duty on petrol by Rs1.60 per litre and on diesel by 30 paise to raise Rs3,200 crore.
In the three increases, the government is expected to mop up over Rs10,000 crore to meet its budgetary deficit.
Prior to these, the government had in four installments raised excise duty on petrol and diesel between November 2014 and January 2015 to lessen the reduction in retail rates, which followed falling international oil rates.
The four excise duty hikes during this period totalled Rs7.75 per litre on petrol and Rs6.50 a litre on diesel. It led to about Rs20,000 crore in additional revenue to the government, helping it meet its fiscal deficit target.
Had the government not raised these duties, consumer price of petrol and diesel would have been lower by Rs10.02 a litre and Rs9.97 per litre, respectively. Petrol currently cost Rs59.35 per litre in Delhi while diesel costs Rs45.03 a litre.