The government today ruled out any immediate reduction in excise duty to cushion relentless rise in international oil prices that have sent retail diesel rates in India to record high and petrol to four-year high.
Asked if a second round of excise duty cut was in offing, Finance Secretary Hasmukh Adhia said: “Not as of now. Whenever we review it, we will let you know”.
Earlier in the day, Oil Minister Dharmendra Pradhan said the government is keeping a close eye on international prices but said there is no going back on free market pricing.
Petrol price today hit a four-year high of Rs 73.83 a litre, while diesel rates touched an all-time high of Rs 64.69 in the national capital on rising international oil rates.
“Centre and state bank on tax revenues to meet developmental needs. 42 per cent of collections from excise duty (on petrol and diesel) goes to states and out of the remaining 60 per cent is used to fund centre’s share in development schemes in states,” he said.
Petrol, diesel, natural gas, crude oil and jet fuel (ATF) are currently not included in GST, which essentially leads to producers not being able to set-off tax paid on inputs from final tax on product.
The government, he said, had cut excise duty on petrol and diesel by Rs 2 per litre in October and some states had followed it up with a reduction in VAT (value added tax).
Petrol in the national capital now costs Rs 73.83 a litre, the highest since September 14, 2014 when rates had hit Rs 76.06. Diesel price at Rs 64.69 is the highest ever, with previous high of Rs 64.22 being on February 7, 2018.
The government had raised excise duty nine times between November 2014 and January 2016.
Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT but just four of them — Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh — reduced rates while others including BJP-ruled ones ignored the call.
The central government had cut excise duty by Rs 2 per litre in October 2017, when petrol price reached Rs 70.88 per litre in Delhi and diesel Rs 59.14. Because of the reduction in excise duty, diesel prices had on October 4, 2017 come down to Rs 56.89 per litre and petrol to Rs 68.38 per litre. However, a global rally in crude prices pushed domestic fuel prices far higher than those levels.