Petrol price touches Rs 74.50 a litre, govt not in favor of reducing excise duty

Petrol price on Monday hit a 55-month high of Rs 74.50 a litre, while diesel rates touched a record Rs 65.75, renewing calls for a cut in excise duty to ease the burden on consumers.

Representational Image: Indian Express

 

The government is not in favour of cutting excise duty on petrol and diesel despite a spike in fuel prices, PTI reported on Monday. It, however, wants states to cut sales tax or VAT on fuel, a senior official said.

Petrol price on Monday hit a 55-month high of Rs 74.50 a litre, while diesel rates touched a record Rs 65.75, renewing calls for a cut in excise duty to ease the burden on consumers. The jump in fuel price is despite the dip in global crude oil cost due to international factors.

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The government is targeting reducing fiscal deficit to 3.3 per cent of the gross domestic product (GDP) in the current fiscal, from 3.5 per cent last fiscal.

The finance ministry official said that a reduction in excise duty, which makes up for a quarter of retail fuel price, is not advisable if the government is to stick to the path of reducing budgetary deficit. “Excise duty cut would be a political call, but is not advisable if we have to stick to the fiscal deficit glide path outlined in Budget,” he was quoted as saying by PTI.

The government is targeting reducing fiscal deficit to 3.3 per cent of the gross domestic product (GDP) in the current fiscal, from 3.5 per cent last fiscal. “Every rupee cut of excise on fuel will result in a loss of Rs 13,000 crore to the government,” the official said, adding that the oil ministry has not yet officially asked for a cut in fuel excise duty.

The official said states should cut VAT on fuel to ease the burden on the consumer. “Fiscal considerations are far higher than one or two rupee price impact on consumers,” he said. “One or two rupee increase doesn’t impact inflation.”

The central government levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per litre on diesel. State sales tax or VAT vary from state to state. In Delhi, VAT on petrol is Rs 15.84 and Rs 9.68 a litre on diesel.

The petrol price in New Delhi was the highest in nearly five years and became dearer by 10 paise from Sunday’s cost of Rs 74.40 per litre. In September 2013, the price had touched Rs 76.06 a litre in the national capital.

In Kolkata, Mumbai and Chennai too, prices climbed to new multi-year highs at Rs 77.20, Rs 82.35 and Rs 77.29 per litre respectively on Monday. The previous highs in these cities were Rs 78.03 (Kolkata, August 2014), Rs 83.62 (Mumbai, September 2013) and Rs 77.48 (Chennai, September 2013).

Besides petrol, diesel prices, too, touched fresh record levels on Monday in Delhi, Kolkata, Mumbai and Chennai. They rose to Rs 65.75, Rs 68.45, Rs 71.01 and Rs 69.37 per litre respectively.

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