The government is considering a second slash in excise duty on petroleum products this year. The reduction in excise duty could range between Rs 1 and Rs 1.50. The recommendation to slash duty was made by the Bharatiya Janata Party (BJP) to ease retail prices of petrol and diesel.
Narendra Taneja, convenor of the BJP’s energy cell, confirmed the move. “I have suggested a cut of Rs 1.50 in the basic excise duty and I understand that the petroleum ministry is in talks with the finance ministry,” he said.
If implemented, the move would reduce prices of both products. The price of petrol has hit a four-year high of Rs 73.83 a litre and diesel has touched an all-time high of Rs 64.69 in the national capital. The surge in prices can be attributed to rising international oil rates.
In the Budget, the government had reduced the basic excise duty on petrol and diesel by Rs 2. The government also abolished additional excise duty on fuel. But, to compensate the move on the fiscal front, it increased the road cess to Rs 8 per litre.
The government is better placed to consider a cut in the new fiscal year. A reduction now will not impact the fiscal deficit numbers for 2017-18, expected to be 3.4 per cent.
The petroleum ministry had earlier asked the finance ministry for a cut but the move did not amount to anything. It is likely to be accepted this time. However, without reworking tax rates to bring them within the goods and services tax, consumers will not see any long-term benefits even after the proposed cut.