After excise duty cut, petrol price drops by Rs 9.5/litre, diesel Rs 7/l; Rs 200 LPG subsidy for Ujjwala beneficiaries
In a move to give relief to consumers suffering from high fuel prices, the Centre on Saturday announced to cut excise duty on petrol by a record Rs 8 per litre and on diesel by Rs 6 per litre. This will, effectively, reduce the price of petrol by Rs 9.5 and that of diesel by Rs 7. The Government also announced a subsidy of Rs 200 per cylinder for the Pradhan Mantri Ujjwala Yojana beneficiaries, for 12 cylinders in a year. But the Opposition isn’t impressed.
From Sunday, petrol will thus cost Rs 95.91 a litre in Delhi as against Rs 105.41 a litre currently while diesel will cost Rs 89.67 a litre as against Rs 96.67 a litre. A 14.2-kg LPG cylinder presently costing Rs 1,003 in Delhi will now cost Rs 803 for the Ujjwala beneficiaries.
“It is always people first for us. Today’s decisions, especially the one relating to a significant drop in petrol and diesel prices will positively impact various sectors, provide relief to our citizens and further ‘Ease of Living’,” Prime Minister Narendra Modi tweeted after Union Finance Minister Nirmala Sitharaman announced the decisions.
“Ujjwala Yojana has helped crores of Indians, especially women. Today’s decision on Ujjwala subsidy will greatly ease family budgets,” Modi said. Announcing the duty cut “despite the challenging international situation” through a series of tweets, Sitharaman said, “It will have a revenue implication of around Rs 1 lakh crore/year for the Government.” She exhorted all State Governments to also cut local sales tax or VAT. “I wish to exhort all State Governments, especially the States where reduction wasn’t done during the last round (November 2021), to also implement a similar cut and give relief to the common man,” she said.
Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said, “I want to highlight the fact despite this 2nd reduction in Central excise, price of petrol & diesel in States like Maharashtra, Rajasthan, West Bengal, Tamil Nadu, Andhra Pradesh, Jharkhand & Kerala remain around Rs 10-15 higher than in BJP-ruled States”
BJP president JP Nadda also said in a statement that the Opposition too should reduce petrol and diesel rates in the States governed by them so that common people can get some more relief amid inflation.
Kerala’s Left Government responded with its Finance Minister KN Balagopal announcing a cut in tax on petrol and diesel by Rs 2.41 and Rs 1.36 respectively.
But Congress general secretary Randeep Singh Surjewala termed the decisions “jumlas”. He demanded the restoration of Central excise duty to May 2014 levels of Rs 9.48 per litre on petrol and Rs 3.56 per litre on diesel. “U increased Excise on Petrol by Rs 18.42/litre and now reduced it by Rs 8/litre. It is still Rs 19.90 V/S Rs 9.48 during Congress,” he said in one of his tweets addressing Sitharaman.
The TMC also said it’s not good enough as the Central Government increased price of petrol and diesel by Rs 10 recently. TMC MP Saugata Roy said, “The Central Government still has the flexibility to reduce excise duty more instead of pressuring the States (to reduce VAT) as State’s finances are mostly in difficulty.”
NCP chief Sharad Pawar, however, said, “It’s better than nothing,”
The subsidy to Ujjwala Yojana beneficiaries is aimed at easing some of the burden arising from cooking gas rates rising to record levels. “This will help our mothers and sisters,” tweeted Sitharaman.
This excise duty cuts along with Rs 5 cut on petrol and Rs 10 reduction on diesel effected from November 4, 2021, rolls back the Rs 13 per litre and Rs 16 per litre increase in taxes on petrol and diesel effected between March 2020 and May 2020 to avoid passing on to consumers the sharp fall in international oil prices at that time.
The excise duty hikes of 2020 had taken central taxes on petrol to their highest level of Rs 32.9 per ltire and that on diesel to Rs 31.8 a litre.
After the latest excise cut, the incidence of central tax on petrol will come down to Rs 19.9 a litre and that on diesel to Rs 15.8 per litre.
Post November 2021 reduction in excise duty on petrol by Rs 5 per litre and that on diesel by Rs 10 a litre, 25 States and UTs had cut VAT to give further reprieve to consumers battered by record-high retail prices. However, States ruled by non-NDA parties like Maharashtra, Andhra Pradesh and Tamil Nadu had not reduced VAT.
Post that reduction, state-owned oil firms kept petrol and diesel prices unchanged for a record 137-day period during which international oil prices rose from USD 84 per barrel to a nearly 14-year high of USD 140. They finally broke the hiatus with a Rs 10 per litre increase on both petrol and diesel in 16 days starting March 22 but again hit the freeze button after the last revision on April 6.
This despite the fact that oil prices ruled above $100 per barrel and the gap between cost and selling price was as high as Rs 13 a litre on petrol and Rs 24 on diesel.
Holding of prices despite rise in cost had led to lower earnings of fuel retailers in the January-March quarter.