The government has cut the basic excise duty on diesel and petrol by Rs.2 per litre in an attempt to soothe the public from the impact of inflation. The reduction in excise duty takes effect from 4th October 2017.
The Central Board of Excise and Customs issued a statement yesterday informing that the government is reducing the basic excise duty on both branded and unbranded diesel and petrol by Rs.2 per litre. This is to cushion the impact of the hike in international prices of crude petroleum and the retail costs of petrol and diesel in India.
Since September 13, the price of petrol in Delhi was at Rs.70.88 per litre. The cost of diesel was Rs.59.14 per litre in Delhi. In Mumbai, the price of petrol hit Rs.79.99 per litre yesterday, the highest since August 2014. The price of diesel was the highest in 3 years in the metros of Chennai and Kolkata at Rs.62.30 per litre and Rs.61.80 per litre, respectively.
With the cut in excise duty, petrol price has dropped to as much as Rs.2.5 per litre and stands at Rs.68.38 per litre in Delhi. Diesel prices have plunged by Rs.2.25 per litre to stand at Rs.56.89 per litre as well. The new price of petrol in Mumbai will be Rs.77.51 per litre.
Petroleum products were some of the few commodities that were left out of the new Goods and Services Tax (GST) system implemented by the government earlier this year. In some cases, the central excise and state duties made up for more than 50% of the retail prices of fuels.
The government had deregulated fuel prices from its ambit in 2010, and allowed the oil refining and marketing companies to set the price in line with the market dynamics. Earlier this year, the government also introduced the concept of dynamic fuel pricing in the country. This enabled fuel prices to be revised daily, based on the change in crude oil prices.
The latest initiative from the government in lowering the cost of retail fuel without impacting the oil marketing companies seems to be a move in the right direction. The government itself will bear the loss in revenue arising from this, i.e., up to Rs.13,000 crore for the remaining part of the fiscal year 2017-18.