NEW DELHI: Petrol and diesel will cost Rs 2 less from Wednesday as the government has decided to reduce the basic excise duty on these two products. This is the first such move by the BJP-led NDA government at the Centre since it assumed power in 2014.
The government had raised the duties three years back when international crude prices fell. It has also been facing criticism for not cutting the duty despite a sustained rise in prices since July.
The move is likely to cause a revenue loss of about Rs 26,000 crore to the government for a year, and about Rs 13,000 crore for the rest of this financial year. “It’s manageable,” said a Finance Ministry official reacting to the move.
Petrol attracts excise duties of about Rs 21.48 per litre while on diesel it is Rs 17.33 per litre. “This decision has been taken by the government in order to cushion the impact of rising international prices... as well as to protect the interest of common man,” read a Finance Ministry statement.
“It is a right move but a late move…the consumer had been paying higher taxes when the prices were low for these products,” said energy expert Ravi Sharma.
This rise in the prices of the two critical petroleum products was also reflected in WPI inflation, which increased to 3.24 per cent in August 2017, as compared to 1.88 per cent in July 2017.
“This also prompted the government to act swiftly in this regard,” claimed a Finance Ministry statement referring to the inflation numbers.