Fuel prices hit 55-month high; Petroleum ministry may approach FinMin for excise duty cut

New Delhi: Petrol and diesel prices touched 55-month high on Monday, renewing calls for a cut in excise duty to ease the burden on consumers. Sources told Zee Media that the government held meeting with chief of Oil Marketing Companies (OMCs) and reviewed daily pricing mechanism for petrol and diesel. The Petroleum ministry is also believed to be evaluating global price trend and the impact of daily pricing of fuel with OMCs.

State-owned oil firms have been revising auto fuel prices daily since June last year. Under the dynamic pricing scheme, petrol and diesel prices are revised on a daily basis in sync with global crude oil prices.

Sources further told Zee Media that the Petroleum Ministry may approach the Finance Ministry for cut in excise duties adding that the government will push states again to cut VAT on petrol and diesel.

The central government levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per litre on diesel. State sales tax or VAT vary from state to state. In Delhi, VAT on petrol is Rs 15.84 and Rs 9.68 a litre on diesel.

While the government is hoping that geopolitical tension would ease and US shale oil would help ease oil prices, it is not in favour of tinkering with the autonomy given to oil PSUs to revise rates daily in line with the cost.

The hike, necessitated due to firming international oil prices, comes on the back of a 32 paise increase in rates of petrol effected over the last two days.

Petrol in the national capital now costs Rs 74.50 a litre, the highest since September 14, 2013, when  rates had hit Rs 76.06. Diesel price at Rs 65.75 is the highest ever.

India has the highest retail prices of petrol and diesel among South Asian nations as taxes account for half of the pump rates.

The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.

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.

In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government's excise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.

With Agency Inputs