The Modi Government on Saturday hiked the excise duty on petrol and diesel by a steep Rs 3 per litre each to generate an additional revenue of about Rs 39,000 crore.
Though retail prices of petrol and diesel will not be impacted as state-owned oil firms adjusted them against the recent fall in oil prices, the Government has once again, just as in 2014-15, not passed on the gains arising from a slump in international oil prices. The Congress hit out at the Government saying the Modi-Shah Government has looted the people by raising the excise duties and tax and demanded that the hike be withdrawn and the benefits be passed to the common man. It also said it will strongly raise the issue both inside and outside
Parliament. Last Sunday, Saudi Arabia announced it would boost production and cut crude oil prices which caused oil prices to fall some 32% to about $28 a barrel, levels not seen since the bottom of the last crash in February 2016. According to sources in the Government, the Centre has taken this step of increasing duty to raise revenue in view of a tight fiscal-deficit situation. This may help the Centre in generating the resources for development of infrastructure and other developmental items of expenditure, they
said. According to a notification issued by the Central Board of Indirect Taxes and Customs, special excise duty on petrol was hiked by Rs 2 to Rs 8 per litre in case of petrol and to Rs 4 a litre from Rs 2 in case of diesel. Additionally, road cess was raised by Re 1 per litre each on petrol and diesel to Rs 10. With this, the total incidence of excise duty on petrol has risen to Rs 22.98 per litre and that on diesel to Rs 18.83.
The tax on petrol was Rs 9.48 per litre when the Modi Government took office in 2014 and that on diesel was Rs 3.56 a litre.Officials said the increase in excise duty will result in annual increase of Government revenues by about Rs 39,000 crore. The gains during the remaining three weeks of the current fiscal would be less than Rs 2,000 crore.
Petrol and diesel prices, which are changed on a daily basis, were cut by 13 paise and 16 paise respectively as oil companies adjusted the excise duty hike against the drop in prices that warrants from international rates slumping the most since the Gulf war.
The Govt had between November 2014 and Jan 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.
Critics of the Govt have estimated that after the drastic cut in prices oil prices in India should have drastically declined which they have not with Petrol still costing Rs 69.87 a litre in Delhi and a litre of diesel at Rs 62.58.
Congress' senior spokesperson Ajay Maken said the government should reduce the rates of petrol, diesel, and LPG by at least 35-40 per cent. "In Dollar terms, the international crude oil prices are down to the level of June-July 2004, when the petrol, diesel and LPG were available at Rs 35.71, Rs 22.74 and Rs 281.60 per cylinder respectively, which were quite cheap in comparison to the present rates," Maken said.
Maken said the total incidence of excise duty on petrol has risen to Rs 22.98 per litre and that on diesel to Rs 18.83. The tax on petrol was Rs 9.48 per litre when the Modi government took office in 2014 and that on diesel was Rs 3.56 a litre, he said.
"The Modi-Shah Govt has looted the people by increasing excise duties and huge taxes on petroleum products and did not bring this under GST despite the consistent demand of Congress," he said.