Fuel prices on the boil again, diesel breaches Rs 80 in Mumbai

Gladys Abbott
October 4, 2018

In a major yet marginal relief for the consumers, the Narendra Modi led-BJP government reduced the excise duty on petrol and diesel by Rs 2.50 on Thursday, October 4. He said that the central government will reduce excise duty by Rs 1.5 while oil companies will absorb the remainder.

Jaitley also said that the Finance Ministry is writing to the state governments to cut Rs 2.50 from the Value-Added Tax imposed on petrol and diesel prices.

Chief Minister of Maharashtra, Devendra Fadnavis, has also tweeted that the state government will reduce prices of petrol and diesel, with the former now costing Rs 5 less. "The Central government and state government are working together to give more & more relief to the people", he told ANI.

For state-owned fuel retailers absorbing Re 1 per litre price would mean about Rs 10,700 crore dent in their revenue on an annualised basis.

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"Excise duty to be reduced by Rs.1.50 and OMCs will absorb 1 rupee". PM Modi consulted Union Finance Minister Arun Jaitley and Oil Minister Dharmendra Pradhan. The hike pushed petrol price in Delhi to an all-time high of Rs 84 per litre and diesel to Rs 75.45. After steadily raising taxes on fuel between 2014 and 2016, the Centre now levies an excise duty of Rs 19.48 per litre on petrol and Rs 15.33 on diesel. Oil marketing companies, simultaneously, will take a Re 1 per litre hit as well.

"The Brent oil since yesterday has crossed 86$/bbl which is the highest in the last four years".

Jaitley said the decision to give relief to consumers was necessitated by the uncertainty regarding the global oil prices and was made possible by better-than-expected revenue collections. The centre levies a total of Rs 19.48 per litre of excise duty on petrol and Rs 15.33 per litre on diesel. Jaitley expressed confidence in maintaining the fiscal deficit target for the current financial year despite the reductions.

Indian Oil Corporation (IOC), the country's largest fuel retailer, hiked the price of diesel and petrol by 21 paise and 14 paise respectively on Thursday. He said on Twitter, "I congratulate the chief ministers of all the BJP-ruled states for this sensitive decision that will give relief to the public".

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