JOIN USFor the third time in six weeks, the Centre on Thursday hiked the basic excise duty on petrol and diesel and absorbed the benefit of falling crude oil prices that would have been otherwise passed on to consumers by oil marketing companies.
The government's decision to increase the excise duty on all brands of petrol and diesel by Rs 2 each came just when the oil marketing companies were to announce a cut on fuel prices as part of their fortnightly review of the retail selling price on the basis of the latest international crude oil prices and rupee-dollar exchange rate.
As a result of the decision, there won’t be any reduction in the retail prices of fuel for the next two weeks. As part of the government's fuel price deregulation, the oil marketing companies are allowed to undertake fortnightly review of fuel prices depending on the cost of crude oil imports. However, the price of non-subsidised LPG (14.2 kg cylinder) was reduced by Rs. 43.50. But the biggest benefit of the latest fuel price revision went to the aviation sector. The aviation turbine fuel was slashed by 12.5 per cent.
The government, in a brief statement, explained the decision to increase the basic excise duty on petrol and diesel stating that it was doing so to fund its “ambitious infrastructure development programme…particularly the building of 15,000 km of road, during the current and next financial year.”
With Thursday’s hike in the basic excise duty on petrol and diesel, the government has increased Central excise duty on the two products by Rs. 5.75 per litre on petrol and Rs. 4.50 per litre on diesel.
The government raised the excise duty on November 12 and December 2 last year. On November 12 ,the duty on petrol was increased by Rs 1.50 a litre for both petrol and diesel. Later, on December 2, the duty on petrol was hiked by Rs 2.25 per litre and on diesel by Re 1 a litre.
Petrol and diesel prices were last cut each by Rs 2 a litre on December 15 and on December 1 by 91 paise and 84 paise respectively.
The crude oil price (Indian basket) has continuously fallen since the Modi government came to power at the Centre in May last year. From a monthly average price of$ 109.05 per barrel for June, it fell sharply to around $ 57 a barrel in December.
On Wednesday, the last day of the year, the crude price, according to the Petroleum and Natural Gas Ministry data, was as low as $ 53.12 a barrel—a decrease by over 51 per cent in seven months since June. The rupee has, however, depreciated a bit against the dollar during the same period.