New Delhi: The government has decided to raise excise duty on petrol and diesel significantly, by upto Rs 8 per litre, to mobilise additional resources that would be required to fight the Covid-19 pandemic.
As per the amendments introduced in the Finance Bill 2020, the Finance Ministry has proposed to raise special additional excise duty on petrol to Rs 18 per litre from present Rs 10 per litre and on diesel to Rs 12 per litre from the present Rs 4 per litre. The said changes have been made by amending the eighth schedule of the Finance Act 2002.
It is not clear whether the entire Rs 8 per litre increase in special additional excise duty would be used as cap to raise duties upto that level or the government would notify entire increase at one go.
If this happens, the retail price of petrol and diesel could shoot up by Rs 5-6 per litre as remaining amount may be absorbed by public sector oil marketing companies who have been daily reducing the price of two petroleum products in line with global fall in oil prices.
Sources said that a notification with changes in duty structure on petrol and diesel may come later in the evening.
For the government, a Rs 8 per litre rise would a bonanza that would increase its annual excise collections from the sector by a whopping Rs 1,20,000 crore. This, govermment officials feel, along with savings of over $15-20 billion in oil import bill in FY21, will provide enough room to bring the economy back on track after Covid-19 fight.
But any resultant increase in retail price of the two products could have a negative impact on the economy already facing a slowdown. Price rise of auto fuels could have a multiplier effect raising prices of several essential products and services and pushing up inflation.
In February, the consumer price inflation had fallen to 6.58 per cent but this could begin to rise again if petrol and diesel prices are raised. (IANS)
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