Govt may cut excise duty on petrol, diesel again

The Centre may go in for one more excise duty cut on petrol and diesel before elections in five states commence if the pump prices of the fuels continue to rise in the wake of a weak rupee vis-a-vis the dollar.

If that happens, it will be only the third time the excise duty will be lowered since 2014. Rajasthan, Chhattisgarh, Madhya Pradesh, Mizoram and Telangana will go to polls between November 12 and December 7.

“Though crude oil prices in the international market have come down, the depreciating rupee may pose a problem. If that happens, the government may not ask the oil marketing companies to take a hit. It will try to bear the burden instead,” informed sources told DH. A top finance ministry official said the government did not want to weaken oil companies.

On October 6, the shares of oil marketing companies had taken a hit forcing them to lose Rs 1 lakh crore in a single day after the government had asked them to take a Re 1/litre hit on fuel while the central exchequer bore the brunt of Rs 1.50 per litre on both fuels.

Way to curb pump prices of both fuels was one of the main issues at the meeting between Prime Minister Narendra Modi and Finance Minister Arun Jaitley when they met along with some of the top OMCs here last Friday, a sources close to the development said.

Although, he said, broadly the two discussed ways to ramp up domestic oil production.

Reining in fuel prices, which will essentially mean cutting down expenditure on some other schemes, is increasingly becoming difficult for the government closer to parliamentary elections.

Experts say, the government may choose to roll over some subsidies to next year but that has a cost for the new government after the elections.

Petrol prices have risen by almost Rs 1.40 per litre since the time the excise duty cut was announced on October 5.

Among the five states going to elections, petrol is costliest in Telangana at Rs 87.75 per litre.

In Madhya Pradesh, it is almost Rs 86 per litre followed by Rajasthan where it is selling at Rs 83.22 on Sunday.

On Monday, the prime minister also called a meeting of over three dozen global and domestic oil company chiefs to look for ways to cut India’s oil import by 10% by 2022.