NEW DELHI: The Central government’s reduction in excise duty combined with the lowering of VAT by the state governments have led to a moderation of the retail selling price of petrol and diesel in the country, according to the Economic survey released by the government on Tuesday.
The survey noted that in FY22 and FY23, inflation in WPI of "fuel and power" was mostly driven by high international crude oil prices.
"Central Government has made interventions by calibrating the excise duties on petrol and diesel. The first phase of reduction in terms of Rs 5 on petrol and Rs 10 on diesel was made effective from Nov 4, 2021, and the second phase from May 22, 2022 (Rs 8 per litre on petrol and Rs 6 per litre on diesel)," reads the survey.
According to the survey, due to the subdued global demand because of Covid-19 induced restrictions, the price of the Indian basket of crude oil during FY21 stayed in the range of US$20-65/bbl.
However, after this, the prices started surging on account of unprecedented cuts in crude oil supply by the Organisation of the Petroleum Exporting Countries (OPEC) and other oil-producing countries.
"The upward trend continued in FY22 and FY23, as demand picked up with the easing of Covid-19 restrictions in most regions of the world. Also, owing to supply disruption amid rising tensions in Eastern Europe and the Middle East in June 2022, the Indian basket of crude oil peaked at US$116/bbl," reads the survey.
Subsequently, the price declined to $78/bbl in December 2022. Further, a cut in central excise duty on petrol and diesel in November 2021 and May 2022, followed by a reduction in Value Added Tax (VAT) by the state governments, led to a moderation of the retail selling price of petrol and diesel in India.