The Government today raised the excise duty on petrol by Rs 2.25 per litre and by Re 1 a litre on diesel but retail pump rates will not be increased as oil firms decided to absorb the duty change for the time being.
The second excise duty hike in three weeks will help raise an additional Rs 4,000 crore in four months to March as the Government seeks to take advantage of a slump in world oil prices to shore up its revenues without stoking inflation.
Together with Rs 1.50 a litre excise duty hike effected on November 12, the Government will mop up about Rs 10,000 crore in the remainder of the current fiscal that will help contain the Budget deficit.
With Assembly elections underway in Jammu and Kashmir and Jharkhand and polls due in Delhi soon, the State-owned fuel retailers have decided to absorb the excise duty change.
“This (excise duty hike) is not being passed on to the consumers,” Indian Oil Corp (IOC) Chairman B Ashok told PTI.
“Since we had only yesterday revised petrol and diesel prices, we decided a change so soon is not warranted.”
The oil firms had cut petrol and diesel prices by 91 paisa a litre and 84 paisa per litre respectively to factor in a slump in international oil prices.
Asked if oil companies while revising rates yesterday had factored in a possible excise duty hike, he said the price cut was a true reflection of a fall in the international oil rate — from $93.23 per barrel in the first fortnight of November to $87.21 in the second half, and devaluation of rupee value — from Rs 61.46 to a US dollar to Rs 61.80.
“We are absorbing the excise duty increase for now. We are keeping track of the changing scenario and will take appropriate steps as the situation warrants at the next revision (due in mid-December),” Ashok said.
Excise duty on normal or unbranded petrol has been hiked from Rs 2.70 per litre to Rs 4.95 a litre and on unbranded diesel from Rs 2.96 a litre to Rs 3.96. The total incidence of excise on petrol after including special excise duty and road cess will be Rs 12.95 and that on diesel Rs 5.96 a litre.
Similarly, excise duty on branded petrol has been raised from Rs 3.85 a litre to Rs 6.10 and on branded diesel from Rs 5.25 to Rs 6.25.