Petrol prices cross Rs 80/l in Mumbai; Oil ministry seeks cut in oil subsidy
India’s oil ministry is pushing for a cut in excise duty on petrol and diesel in the upcoming 2018/19 budget to cushion the impact of rising oil prices on its vast consumer base, two oil ministry officials told Reuters on Monday.
Prime Minister Narendra Modi, who faces elections in key states later this year, and a nationwide election in early 2019, has faced pressure over a rise in retail prices of petrol and diesel to a record level.
According to a report in Reuters, the ministry has also sought inclusion of petrol, diesel, jet fuel and natural gas in the GST to help companies claim tax credits against the tax paid on the purchase of equipment meant to produce refined fuel. Taxes on petrol and diesel make up about 40-50 per cent of the pump prices in the country.
Another excise duty cut is likely to put an additional burden on the fiscal deficit target as the government is grappling with lower indirect tax revenues after the GST implementation.
Centre had steadily increased excise duty on petrol and diesel when the global crude prices had plummeted below $30 a barrel. The government had in November 2015 and January 2016 raised excise duty on petrol and diesel five times to take away gains arising from plummeting international oil prices.
The cut in excise duty is likely to offset the hike in global crude prices ahead of 2019 Lok Sabha elections.
