New Delhi: The government on Monday announced that it has increased excise duty on petrol and diesel by Rs 2 each, with effect from Tuesday, but there will be no increase in the retail prices of the two fuels as oil prices have come down in the global market.
The lower crude oil prices will reduce the cost of production for oil refining and marketing companies such as Indian Oil and Bharat Petroleum and increase their retail margins. This will enable the government to raise more revenue from an excise duty hike without increasing the burden on consumers.
“The PSU Oil Marketing Companies have informed that there will be no increase in retail prices of petrol and diesel, subsequent to the increase effected in Excise Duty Rates today,” the Ministry of Petroleum and Natural Gas posted on X.
The excise duty on petrol has been increased to Rs 13 per litre and that on diesel to Rs 10, according to the order.
The move aims to mop up more revenue as crude oil prices have fallen to a four-year low in the global market with the benchmark Brent crude falling to $63 a barrel – the lowest since April 2021 – and the US West Texas Intermediate crude declining to $59.57. India, the world’s 3rd largest importer of crude, stands to gain as oil prices have fallen.
Oil prices extended losses on Monday, falling close to 4 per cent as growing trade tensions between the United States and China triggered fears of a recession that would lead to a decline in the demand for crude, while the OPEC+ oil cartel has decided to increase supply.
Brent futures lost $2.43, or 3.7 per cent, to $63.15 a barrel and US West Texas Intermediate crude futures were down 3.9 per cent, at $59.57.
Saudi Arabia, the world’s top oil exporter, on Sunday slashed crude oil prices for Asian buyers in May by up to $2.3 per barrel.
The decline in oil prices augurs well for the Indian economy as the country imports around 85 per cent of its crude requirement, and any decline in oil prices leads to a reduction in the country’s import bill. This, in turn, leads to a lowering of the current account deficit (CAD) and strengthening of the rupee.
Apart from strengthening the external balance, a decline in oil prices also leads to lower prices of petrol, diesel and LPG in the domestic market, which eases inflation in the country.
The government has also helped to reduce the country’s oil import bill by allowing the oil companies to buy Russian crude at discounted prices despite Western pressures in the wake of the Ukraine war. The Narendra Modi government has stood firm in maintaining its ties with Russia despite the sanctions against Moscow imposed by the USA and Europe.
Russia has now emerged as the largest supplier of crude oil to India replacing Iraq and Saudi Arabia which occupied the top slot earlier. India has in fact become the largest purchaser of Russia’s seaborne oil which accounted for close to 38 per cent of India’s total oil imports.
(IANS)
