Nothing short of stimulus: Fuel tax cuts may boost consumption by Rs 35K-cr

With revenues set to exceed the annual target by Rs 2 trillion, a softer revenue loss that boosts consumption will provide immense relief, especially to lower income households

After nearly 18 months, the Union government decided to reduce the exorbitant rates of tax on petrol and diesel. The cut of Rs 5 per litre on petrol and Rs 10 per litre on diesel will provide relief to millions of Indian consumers.

But as with any tax cut, this will hit the government’s treasury. But by how much?

A Business Standard analysis shows that the Centre will lose close to Rs 35,000 crore from the decision. Sounds like a big loss to the exchequer, but this amount will remain in the consumers’ pockets for consumption in the remaining part