The finance ministry is not keen on cutting the excise duty on petrol and diesel even as prices have touched all-time highs. The ministry feels such a step would disturb the fiscal deficit roadmap for the year. Moreover, petrol price hike is cyclical and resorting to excise cut each time is not a good idea. The ministry is believed to have conveyed its apprehensions about cutting excise to the Prime Minister’s Office (PMO). The ball now is in PMO’s court.
The ministry is of the view that petrol prices keep going up and coming down and therefore a wait and watch policy at this time would be better, sources said, adding that the finance ministry wants one to stay calm for crude oil price hike to settle rather than taking a decision on reducing the duty. States should also chip in to give relief to the consumers in the form of cutting VAT, they added. Incidentally, most states — as many as 21 — are ruled by the BJP. The government is targeting reducing fiscal deficit to 3.3 per cent of the gross domestic product (GDP) in the current fiscal, lower than 3.5 per cent in the previous financial year.
“Every rupee cut of excise on fuel will result in a loss of Rs 13,000 crore to the government,” an official said.
The finance ministry is hoping that geopolitical tensions would ease and US shale oil would help ease oil prices, so it is not in favour of reducing the excise duty on fuel, sources added.
“Reduction in excise duty is being considered as the last option by the finance ministry. The ministry hopes to arrange for different alternatives to give respite to consumers who are bearing the brunt of soaring fuel prices,” a source said.
Sources further said the finance ministry will arrive at a conclusion after holding meetings with the oil marketing companies. The ministry wants review or evaluate global price trend and the impact of daily pricing of fuel with OMCs before arriving at a conclusion. 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 varies from state to state. In Delhi, VAT on petrol is Rs 15.84 per litre and Rs 9.68 a litre on diesel.
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