Stakeholders urge Centre to cut excise duty on auto fuels
Various stakeholders have urged the government to cut excise duty on petrol and diesel to rescue consumers from the spiralling prices of the auto fuels amid the pandemic. Sources said that the Finance Ministry has been urged to take a call on the high levels of duty on the two petroleum products as its higher prices also has an impact on inflation that has fallen to 4.06 per cent in January but has the potential to rise further. The news of a successful Covid-19 vaccine and production cut by oil rich countries has suddenly firmed up global oil prices that gained over $ 10 per barrel since January hover close to $ 65 a barrel now. What this has done is that it has put pressure on petrol and diesel prices that have been raised consistently for past two month by oil marketing companies taking petrol and diesel prices to touch new highs. In Mumbai, petrol is priced 97.57 a litre on Tuesday very close to reaching Rs 100 a litre. In other metro cities also the pump price of petrol has breached all time high levels and in some places petrol isd already priced at over Rs 100 a litre. Taxes, duties and commission on petrol comprise over 200 per cent of the base price of the product that as of March 1 (in Delhi) stayed at Rs 33.26 a litre. The excise component is around 100 per cent of the base price while state level VAT is roughly about 65 per cent of the base price. With regard to diesel, while the base price Rs 34.97 a litre in Delhi, excise duty component is Rs 31.80 a litre and VAT Rs 11.94 a litre. “The high level of taxes along with current firming of global oil market has played havoc for auto fuel consumers in the times of the pandemic. The finance ministry should look at reducing excise duty on the two products so that retail price eases in the time of high volatility,” said a representative of the oil industry that has recommended for a cut in excise duty on petroleum products. While the case for a cut in duty on petrol and diesel has been made, sources indicated that government would only look at this option later this month when crude price stabilises. It is understood that finance ministry has taken note of rising fuel prices and iumpact of central duty on it and may take appropriate action soon. The Covid-19 pandemic and stimulus measure announced by the government to tide over the current economic crisis has already overstretched government finances with exercise now to see new avenues to boost revenue while cutting down on non-critical expenditure. In May, the Centre had substantially raised excise duty on petrol and diesel to mobilise additional resources that would go into funding its Aatmanirbhar Bharat Package. In fact, the centre has kept room for further raising excise duty on the two products in case the situation warranted.
Finance Ministry begins discussion on easing diesel-petrol prices
Amid mounting pressure from all the quarters to reduce taxes on petrol and diesel, the Finance Ministry vigorously started to discuss the burning issue which has created a hole in consumers’ pockets, sources told on Tuesday. “The government is discussing as to what extent the taxes could be cut, and that too, without having much stress on either the Centre or the state government. The discussion has been started among the Ministry officials on how to bring the Centre and government on a platform where relief from high fuel prices can be given to the common man,” said highly placed sources. They said that the Finance Ministry is exploring all kinds of possible options to handle the imminent crisis and is trying to bring states and the Centre at one platform to ensure an expeditious reduction of the prices. Currently, the petrol prices in Delhi are Rs 91.17 per litre and diesel is at Rs 81.47 per litre. Sources privy to knowledge said that apart from excise duty cut, ministry officials have started to find a way to start deliberation with states, as asked by Finance Minister Nirmala Sitharaman last month. The Finance Minister had said that the only way to find a solution to this problem is that the Centre and states should hold a dialogue. “I concede that’s where action has to be, let’s see what we can do,” said Sitharaman, adding that she agrees the end-users should pay less for fuel. Earlier in an interview with ANI, Petroleum Minister Dharmendra Pradhan had appealed to Finance Minister that diesel and petrol prices are hurting the common people and Sitharaman should have a dialogue with the states to bring the prices down. Last week, Reserve Bank Governor Shaktikanta Das has also said that diesel and petrol prices do have an impact on the cost side. “They play as cost-push factor across a range of activities. It’s not just that passengers who use cars and bikes. High fuel prices also have an impact on the cost of manufacturing, transportation, and other aspects, I am sure the state and central government will take a positive decision in a coordinated manner,” the RBI Governor had said. As the coronavirus pandemic hit economic activity, the Centre has twice raised taxes on petrol and diesel in the last 12 months to boost sagging tax revenues instead of passing on the benefits of low oil prices last year to consumers.