New Delhi, Oct 03, 2017 : The central government today said it would reduce the excise duty on petrol and diesel by Rs 2 per litre. The reduction in the duty, which will have a direct impact on the prices of petrol and diesel, will take effect from tomorrow.
In a series of tweets, the Finance Ministry said that the decision has been taken to protect the "interest of the common man" while saying that the decision to reduce the basic excise duty on petrol and diesel will cause loses to the exchequer.
"Revenue loss on a/c (account) of these reductions in excise duty is about Rs.26,000 crore in full year (and) Rs13,000 crore in remaining part of Current FY," the Arun Jaitley-headed Ministry of Finance tweeted.
The the ministry also claimed that the basic excise duty on petrol and diesel has been reduced in order to "cushion the impact of rising international prices of crude petroleum oil & petrol & diesel on their Retail Sale Prices."
Today’s decision by the Centre to indirectly lower petrol and diesel prices comes after the Narendra Modi government came under a barrage of criticism for high fuel prices in India.
Fuel prices in India had been shooting upward ever since daily revision of rates was introduced seemingly at odds with global trends.
The government was criticised for levying high taxes on petrol and diesel and for not bringing them under the Goods and Services Tax regime. Critics argued that because of the high taxes, a fall in the price of global crude had not translated into lower petrol and diesel prices in India.
Notably, global crude prices rose in the last few weeks due to hurricanes in the United States - this rise in crude rates is probably what the Ministry of Finance was referring to when it said that the reduction in excise duty has been affected to "cushion the impact of rising international prices of crude petroleum oil".
The larger question of when petrol and diesel will be brought under the GST regime remains up in the air. Oil Minister Dharmendra Pradhan had previously indicated that the Centre was working on a viable mechanism to bring the petrol and diesel under the GST.
In an interview with India Today TV’s Rajdeep Sardesai, Pradhan had also admitted that the time had come to bring petrol and diesel under the GST regime. A previous IndiaToday.in analysis had found that bringing petrol and diesel under GST would significantly reduce their prices in most states.