The Indian government on Monday announced a hike in excise duty on petrol and diesel by Rs 2 each, which will be effective from Tuesday. However, the retail prices of these fuels will remain unchanged due to the fall in oil prices in the global market.
Lower crude oil prices will reduce production costs for oil refining and marketing companies such as Indian Oil and Bharat Petroleum, thereby increasing their retail margins. Excise duty on petrol has now been increased by Rs 13 per litre and on diesel by Rs 10 per litre.
This move will help the government raise additional revenue without burdening consumers. The Ministry of Petroleum and Natural Gas clarified on social media that there will be no change in the retail prices of petrol and diesel despite the duty hike.
This decision has been taken in view of the fall in crude oil prices in the global market to a four-year low. Currently Brent crude is at $ 63 per barrel and US West Texas Intermediate at $ 59.57. India, which is the world’s third largest crude oil importer, is taking advantage of the fall in oil prices, which will reduce the import bill and narrow the current account deficit (CAD).
The Indian economy is benefiting from the fall in oil prices as it helps control domestic prices of petrol, diesel and LPG. The government has controlled import costs by buying Russian oil at discounted prices despite Western pressure. Russia has overtaken Iraq and Saudi Arabia to become India’s leading oil supplier, accounting for about 38 per cent of India’s total oil imports.