Oil ministry seeks cut in excise duty on petrol and diesel

The oil ministry plans to cut excise duty on petrol and diesel in the forthcoming 2018-19 budget to cushion consumers from the impact of rising oil prices, two oil ministry officials told Reuters yesterday.

With elections to key states later this year and national elections due in early 2019, commentators say the rise in prices of petrol and diesel to record level would work against the BJP government.

They point out that India has the highest retail prices of petrol and diesel among South Asian nations with taxes accounting for about 40-50 per cent of the pump prices.

A litre of petrol costs Rs72.23 ($1.13), while diesel retails at Rs63.01. Petrol and diesel make up about half of India's refined fuel consumption.

''We can only recommend. It is up to the finance ministry to take a decision,'' a senior oil ministry official said, Reuters reported.

A cut in excise duty on petrol and diesel in the budget, which will be unveiled on 1 February, would pose challenges as the government tackles a widening fiscal gap amid falling tax revenues due to the implementation of a goods and services tax (GST) regime from July.

In response to a query on Sunday, union oil minister Dharmendra Pradhan said the sharp increase in petrol rates in the international market had impacted the cost of the fuel in India. He added, that the state governments too levied cess on petrol.

Union oil minister Dharmendra Pradhan on Sunday said his ministry is trying to bring petrol and diesel under the purview of the Goods and Services Tax (GST). "We are trying that petrol, diesel and kerosene should also come under the ambit of GST. We are hopeful that the GST Council will agree to it shortly," the petroleum and natural gas minister told reporters in Ujjain.

Meanwhile, the Congress has called for petroleum projects to be brought under the GST.