NEW DELHI: Fuel prices in the country may not be hiked as is being feared since the government has room to further cut excise duty on petrol and diesel without impacting the revenue target from tax on these two items. This means citizens may not immediately bear the brunt of boiling crude prices in the international market. If one goes by the excise duty collected by the government, it has already mopped up Rs 30,17,46 crore from April 2021 to January 2022.
In 2020-21, the government collected Rs 38,9662 crore excise duty tax in the entire year. If it is compared with this year’s excise duty collection, it is only Rs 87,916 crore short. This, many believe, will be easily covered in the next two months ending this fiscal. “An excise cut would absorb a fair chunk of the lagged adjustment required in fuel prices, reducing the inflationary impact of the spike in crude prices,” said Aditi Nayar, chief economist, ICRA Ratings.
The price of crude oil in the international market has been on a boil ever since Russia started military operations in Ukraine. The Brent Crude Future touched $139 per barrel on 7 February, the highest since 2008. But it again contracted at $116 per barrel on Wednesday.
Many were of the view that oil marketing companies may start hiking oil prices once the election in five states is over. “It (rising crude price) will certainly have an impact on the Indian economy. How much we are going to be prepared to take it as a challenge and mitigate the impact is something which we will have to see as we go (along),” said finance minister Nirmala Sitharaman at an interactive session organised by BJP’s Karnataka unit in Bengaluru.
The government in November 2021 cut the excise duty on petrol and diesel by Rs 5 and Rs 10 respectively. Right now, the excise duty on petrol is Rs 27.9 a litre and diesel Rs 21.8 per litre.
Excise duty tax
In 2020-21, the government collected Rs 38,9662 crore excise duty tax in the entire year. If it is compared with this year’s excise duty collection, it is only Rs 87,916 crore short