Letter to BS: It is a no-win situation whether excise duty is cut or not

The Centre appears to be in a bind in the wake of rising fuel prices. It is a no-win situation whether excise duty is cut or not. The government has so far rightly resisted the clamour for excise cut in the interest of macro fundamentals. However, it is to be noted that the gross refining margins (GRMs) are currently ruling at very elevated levels. Therefore, the government can consider imposing customs duty of say 2.5 per cent to 5 per cent on crude oil import and pass on equivalent benefit to consumers in the form of excise cut on petrol and diesel that can work out to Rs 2 to Rs 4 per litre. This will provide relief to people without the Centre having to sacrifice its revenue. This will, of course, reduce profit margins of oil marketing companies though, which is justified in the wake of prevailing high GRMs.

S K Roongta  Gurugram

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