New Delhi : With government finances stretched, the Centre has no room to cut excise duty on petrol and diesel, a top finance ministry official said on Thursday.
“We have no room to cut tax on petrol and diesel. Any cut in excise duty will have to be compensated by increasing taxes elsewhere,” the official said.
Pressure has been building on the government to cut excise duty on auto fuels, with retail prices of petrol and diesel at record highs due to a rise in crude oil prices and a weak rupee against the dollar. Petrol and diesel prices vary across states. Currently, a litre of both petrol and diesel is at its costliest in Mumbai, priced at Rs 90.35 and Rs 78.82 respectively.
The government’s fiscal deficit widened to Rs 5.913 lakh crore in April-August, accounting for 94.7 per cent of the Budget estimate for the entire fiscal that ends March.
The fiscal deficit for April-August was 12.6 per cent higher than Rs 5.250 lakh crore in the year-ago period, though the deficit for the first five months of 2017-18 had accounted for 96.1 per cent of the Budget estimate.
As the government’s decision to impose 5 per cent customs duty on aviation turbine fuel sparked fears of a rise in airfares, the official said the Centre does not expect the move to significantly impact airline companies.
“Currently, only two airlines import ATF (aviation turbine fuel). Thus, there will not be much impact on these companies and the fuel can also be sourced domestically,” the official said. Aviation turbine fuel was exempted from basic customs duty, until the government’s recent move.
Airlines are already grappling with a steep rise in fuel costs and depreciation in the Indian rupee.
Fuel costs comprise 40 per cent of domestic carriers’ total expenditure, and a weak rupee hurts them as they pay their leases, rentals and maintenance costs in dollars.
According to the website of Indian Oil Corp, aviation turbine fuel costs Rs 69,461 per kl for domestic airlines in Delhi. Price of jet fuel varies across states.
India’s current account deficit in Apr-Jun rose to its highest in five years as merchandise trade deficit continued to balloon.
At $15.81 billion, the deficit was the highest for a quarter since $21.77 billion in Apr-Jun 2013.
The deficit was $13.07 billin in Jan-Mar and $14.98 billion in the June quarter last year.
As a percentage of GDP, current account deficit in the first quarter of 2018-19 was 2.4 per cent, slightly lower than 2.5 per cent in the year-ago period.
