Even as fuel retailers on Friday announced a Rs. 2.42 per litre cut in the price of petrol and Rs 2.25 a litre in that of diesel, the Centre notified a Rs. 2 per litre hike in the excise duty on both, reducing the benefit for consumers.
Announcing the ninth straight reduction in petrol prices since August, and fifth in diesel since October, Indian Oil Corporation, said in Delhi, petrol will cost Rs. 58.91 a litre against Rs. 61.33 a litre now and diesel will cost Rs. 48.26 a litre against Rs. 50.51 currently. The new rates will be effective midnight. The cuts were announced after global Brent slumped to nearly $45 a barrel earlier this week. A $1 billion reduction in global crude reduces India’s trade deficit by $900 million annually, Citi Group estimates. The Finance Ministry notification raised excise duty on unbranded petrol to Rs 8.95 per litre and that on unbranded diesel to Rs 7.96 per litre.
This was the fourth excise duty hike on diesel and petrol since November. The Centre, Finance Ministry estimates, will raise Rs. 20,000 crore additional revenue this fiscal year on account of the four hikes, helping it keep its fiscal deficit within the Budget target of 4.1 per cent of GDP at a time tax revenues are falling short.
Retail prices of diesel and petrol have not kept pace with the 50-per cent fall in global crude since June 2014. Responding to criticism for failing to ensure full benefit of nose-diving crude prices for consumers, Oil Minister Dharmendra Pradhan said on Friday that the pricing of petrol and diesel was no longer in government’s hands as the prices had been decontrolled.