The government today ruled out any immediate reduction in excise duty to cushion relentless rise in international oil prices that have sent retail diesel rates in India to record high and petrol to four-year high.
The BJP-led 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 ₹ 2 a litre.
Asked if a second round of excise duty cut was in offing, Finance Secretary Hasmukh Adhia said: “Not as of now. Whenever we review it, we will let you know“.
Earlier in the day, Oil Minister Dharmendra Pradhan said the government is keeping a close eye on international prices but said there is no going back on free market pricing.
He said consumers will benefit if petrol and diesel are brought under Goods and Services Tax (GST) regime at the earliest.
Petrol price today hit a four-year high of ₹ 73.83 a litre, while diesel rates touched an all-time high of ₹ 64.69 in the national capital on rising international oil rates.
“India needs market pricing to provide oil to all,” Pradhan said at an event organised to mark the launch of Euro-VI grade petrol and diesel in the national capital.
Fuel pricing is based on a transparent mechanism, he said, attributing the spurt in rates to happening in international market. “When crude oil prices rise, naturally consumer feels a pinch,” he said.
“We are concerned (about the impact on consumers). We are keeping a close eye on the developing international oil scenario,” he said.
He, however, did not offer any hint of a government intervention like cutting excise duty to give relief to consumers.
“Centre and state bank on tax revenues to meet developmental needs. 42 per cent of collections from excise duty (on petrol and diesel) goes to states and out of the remaining 60 per cent is used to fund centre’s share in development schemes in states,” he said.
Pradhan said the GST Council - the apex decision making body of the new indirect tax regime - should in the “interest of energy security and consumers” include petroleum products in GST.
Petrol, diesel, natural gas, crude oil and jet fuel (ATF) are currently not included in GST, which essentially leads to producers not being able to set-off tax paid on inputs from final tax on product.
The government, he said, had cut excise duty on petrol and diesel by Rs 2 per litre in October and some states had followed it up with a reduction in VAT (value added tax).
“When there is a pricing issue, states should respond and cut VAT,” he said.
State-owned oil firms, which have been since June last year revising auto fuel prices daily, today raised petrol price by 10 paise per litre and diesel by 11 paise.
Petrol in the national capital now costs ₹ 73.83 a litre, the highest since September 14, 2014 when rates had hit ₹ 76.06. Diesel price at ₹ 64.69 is the highest ever, with previous high of ₹ 64.22 being on February 7, 2018.
The government had raised excise duty nine times between November 2014 and January 2016.
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.
The central government had cut excise duty by ₹ 2 per litre in October 2017, when petrol price reached ₹ 70.88 per litre in Delhi and diesel ₹59.14. Because of the reduction in excise duty, diesel prices had on October 4, 2017 come down to ₹ 56.89 per litre and petrol to ₹ 68.38 per litre. However, a global rally in crude prices pushed domestic fuel prices far higher than those levels.