Central government today again hiked increase duty on petrol and diesel by Rs 2 per litre; however there was no increase in the overall price of the yellow liquids. According to the reports, increment in excise duty was to cut the gains of retailers as global crude oil prices fell to a six-year low.
Cheaper crude oil will neutralise the increase in excise duty. After taking a dip, raw oil is globally selling at $46 per barrel. However, this is the fourth increment in excise duty by the government since November last year and citizens have been denied with a cumulative benefit of Rs 7.75 per litre on petrol and Rs 6.50 per litre on diesel.
A government official said that the four excise duty hike will add nearly Rs 20,000 crores in the treasury, which will help the government in meeting the fiscal deficit target of 4.1 percent of the GDP.
Petroleum Minister Dharmendra Pradhan criticised oil firms for not cutting the oil prices despite the fall of 4% in the crude oil prices. “The pricing was not in our hands as the two fuels have been deregulated. What oil companies feel appropriate they will do,” he said.
However, nation’s largest fuel retailer, Indian Oil Corp’s Chairman, B Ashok said while justifying the decision for not cutting the prices that they were suffering an enormous inventory loss. Further, he added that the crude in refineries was bought 6-8 weeks ago when the prices were high resulting in a loss of nearly 12,000 crores. Thus, they were compensating the losses by not cutting the prices.
“There is a huge drop in crude prices which is having a tremendous impact on our inventories, its a cash loss. We are paying much higher price for the crude and today we are processing the crude at a much lower price and passing it. We are taking our decision based on that, and we think we have been doing the right thing,” Ashok said.
Moreover, excise duty hike will be effective from 12 am 17 January.