Excise raised on petrol, diesel as crude oil slumps to $53 (Third Lead)

The government Thursday raised the basic excise duty on petrol and diesel for the third time in quick succession, even as the expected price reduction on fuels failed to materialise with international crude prices plunging towards $50 a barrel.

"The government has decided to increase basic excise duty on petrol and diesel - both branded and unbranded - by Rs.2 a litre. Allocation of these resources to the road sector will also spur economic activity and employment generation arising from the road construction sector," an official statement said here.

The increased rates of basic excise duty would be effective from midnight of Jan 1 and there would be no change in other excise duty rates applicable to the transport fuels, it added.

The statement said the revenue collected would go towards funding an "ambitious infrastructure development programme", including 15,000 km of road construction, for the current and the next financial year.

"However, retail price of petrol and diesel will remain unchanged all over India despite additional excise duty of Rs.2/litre from midnight today (Thursday)," Petroleum Minister Dharmendra Pradhan tweeted.

To make up for fall in taxes due to the sustained decline in international crude oil prices, the government hiked excise duty by Rs.1.50 a litre on both the fuels first on Nov 12. Later, on Dec 2, the duty on petrol was hiked by Rs.2.25 per litre and on diesel by Re.1 a litre.

This is expected to fetch the government an additional Rs.10,500 crore in the current fiscal.

The money would fund welfare schemes, Pradhan had said.

Though consumers have been spared the impact of the excise hike, industry has been critical saying it was preventing the benefit of falling oil prices from passing to consumers.

There will be no change in the prices of petrol and diesel despite an indication earlier Thursday that these would be reduced. However, jet fuel (ATF) rates have been cut by a steep 12.5 percent with international oil prices continuing to plunge going below $55 a barrel.

An Indian Oil Corp (IOC) source told IANS that owing to some problems with the server, dates and data were being reflected erroneously earlier Thursday on the company's website, which has now been rectified.

The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by Rs.7,520.52 per kilolitre, or 12.5 percent, to Rs.52,422.92 per kl, IOC announced Thursday.

Prices have also been cut for the non-subsidised LPG cylinder, that a consumer may buy at market rates after exhausting the quota of 12 cooking gas cylinders, by Rs.43.50 in Delhi.

The international crude oil price of the Indian Basket on the last trading day Wednesday was $53.53 per barrel.