New Delhi: The Centre has reduced basic excise duty on petrol and diesel by Rs 2 per litre from Wednesday to give some relief to the general public from high fuel prices.
The government was under tremendous political pressure as fuel prices are hovering around three years high despite international crude oil prices nearly half of what they were in 2014.
However, even after Tuesday announcement excise duty on petrol will still be substantial at Rs 19.48 per litre and on diesel by Rs 15.33 a litre.
“This decision has been taken by the government in order to cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on retail sale prices of petrol and diesel as well as to protect the interest of common man,” the finance ministry said in a statement.
It said that the revenue loss on account of these reductions in excise duty is about Rs 26,000 crore in a full year, and about Rs 13,000 crore during the remaining part of the current financial year.
The ministry said that due to the increase in the international prices of petrol and diesel, during the last few weeks, the retail selling prices (RSP) of petrol and diesel at Delhi have risen to Rs 70.83 a litre and Rs 59.07 per litre respectively.
“This rise in the prices of petrol and diesel is also reflected in WPI inflation, which has increased to 3.24 per cent for the month of August 2017, as compared to 1.88 per cent for the month of July 2017. This also prompted the government to act swiftly in this regard,” the ministry explained.
Before the announcement, basic excise duty on petrol was Rs 8.48, special additional excise duty Rs 7 a litre and additional excise duty of Rs 6 per litre. On diesel basic excise duty was Rs 10.33 per litre (before the announcement), special additional excise duty of Rs 1 a litre and additional excise duty Rs 6 a litre.
The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting international oil prices. In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by Rs 13.47 a litre.