ALSO READUnion Budget 2018: Raise funds for education, tax relief under GST, says Assocham Indian Budget's misplaced priorities Budget 2018: Unfair to judge me on demonetisation and GST only, says Modi Budget 2018 may waive NOC to streamline transfer of stressed assets Budget 2018: Expect rural boost, relief for middle class through tax cut
Petrol prices on Tuesday hit the highest level since the BJP government came to power in 2014, and diesel touched a record high of Rs 63.20 a litre, prompting the oil ministry to seek a cut in excise duty.
Petrol price rose to Rs 72.38 per litre in Delhi, highest since March 2014, according to daily fuel price list of state-owned oil firms.
Rates have risen by Rs 3.31 per litre since mid-December. In Mumbai, prices have crossed Rs 80-mark - costliest in the country.
Diesel is being sold at Rs 67.30 in Mumbai, where the local sales tax or VAT rates are higher.
Since mid-December, diesel rates have jumped Rs 4.86 a litre, according to oil companies.
The spurt in rates, caused by the rally in international oil prices, has led to the oil ministry asking the finance ministry for a cut in excise duty in the Union Budget 2018-19, to be presented in Parliament next week.
The reduction sought is part of the pre-Budget memorandum submitted by the ministry for the consideration of Finance Minister Arun Jaitley, officials said.
Oil Secretary K D Tripathi had yesterday stated that the ministry has forwarded a set of recommendation it had received from the industry. He, however, refused to give details.
The central government levies Rs 19.48 per litre excise duty on petrol and Rs 15.33 on diesel.
VAT on petrol in Delhi is Rs 15.39 per litre while on diesel it is Rs 9.32.
Brent and US West Texas Intermediate crude — two of the most-traded benchmark, today rose to $69.41 per barrel and $63.99 respectively. Brent is not far off the January 15 three-year high of $70.37 a barrel. WTI had hit its highest since December 2014, on January 16 at $64.89 a barrel.
The rally in oil prices has renewed calls to the government to cut excise duty to cushion the burden on common man, the officials said.
The BJP-led NDA government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but cut the tax only once in October last year by Rs 2 per litre.
The excise duty in October 2017 was cut when petrol price had reached Rs 70.88 per litre in Delhi and diesel was priced at Rs 59.14.
Because of the excise duty cut, diesel prices had on October 4, 2017, come down to Rs 56.89 and petrol to Rs 68.38. However, a subsequent rally has wiped away all the gains and prices have touched new highs.
The October 2017 excise duty cut cost the government Rs 260 billion (Rs 26,000 crore) in annual revenue and about Rs 130 billion (Rs 13,000 crore) during the remaining part of the current fiscal year that ends on March 31, 2018.
The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.
In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months which helped the government's excise mop-up to more than double to Rs 2,420 billion (Rs 2,42,000 crore) in 2016-17 from Rs 990 billion (Rs 99,000 crore) in 2014-15.
State-owned oil companies in June last year dumped the 15-year old practice of revising rates on 1st and 16th of every month and instead adopted a dynamic daily price revision to instantly reflect changes in cost. Rates during the first fortnight starting June 16 dropped but have been on the rise since July 4.
Since then prices are revised on daily basis. Today, the price of petrol went up by 15 paise per litre and that of diesel by 19 paise.