Excise duty on petrol, diesel cut by Rs 2 a litre

Petrol and diesel will be cheaper by about Rs 2 a litre across the country as the government has decided to reduce the basic excise duty on the two fuels from Wednesday.

Petrol prices had moved up to Rs 70.88 a litre in Delhi on Tuesday, while diesel sold at Rs 59.14. In Bengaluru, petrol sold at Rs 71.99 and diesel at Rs 59.25. Finance Ministry said that the duty cut would cushion consumers from the rising international crude oil prices. It also said that the reduction in rates of petrol and diesel will check the rising inflation. Inflation had increased to 3.24% in August 2017, as compared to 1.88% in July.

The BJP called it a pre-Diwali bonanza. The move has come after a lot of public outcry about the average consumer not being given the benefits of lower crude prices. But Petroleum Minister Dharmendra Pradhan had indicated that the prices will come down by Diwali.

The government had increased excise duty on petrol by Rs 11.77 a litre in five such hikes since November 2015 when the global crude prices were at a low. It also raised excise duty on diesel by Rs 13.44 since that period.

Govt commitment
“The revenue loss on account of these reductions in excise duty is about Rs 26,000 crore in a full year, and about Rs 13,000 crore during the remaining part of the current financial year (up to March 31, 2018),” the ministry said in a statement.

The rate cut on the two fuels has come as a commitment to reducing inflation just a day ahead of the Reserve Bank of India's monetary policy announcement on Wednesday. Analysts have been reading the move as a signal to the RBI that the government is committed to reducing inflation and it should now cut the interest rates. It is widely believed that the RBI will maintain status quo of interest rates on Wednesday.