Representational Image
Representational Image

The government on Saturday hiked the excise duty on petrol and diesel by Rs 3 per litre, the highest in the NDA regime since 2014, with immediate effect to boost its coffers taking advantage of the low global crude oil prices, but asking the oil companies not to pass on the entire increase to the consumers.

The Congress, however, opposed this hike and insisted that the government must roll back the prices by a minimum of 40% to match with the fall in the global oil prices and bring petrol and diesel under GST to keep a check on levying taxes on them whenever it wants.

The retail prices of petrol and diesel are bound to go up because of this hike once the crude oil prices stabilise, though the government is believed to have asked the oil companies to raise the prices gradually and in phases.

The special duty on petrol and diesel has been raised by Rs 2 per litre to Rs 10 per litre and Rs 4 a litre respectively, according to a gazette notification of the Central Board of Indirect Taxes & Customs. Besides, the road and infrastructure cess on them is also raised by Re 1 per litre to Rs 10 per litre. The two measures will raise the government revenue by Rs 45,000 in a year.

The last highest increase of Rs 2 per litre was slapped in the budget last year, besides nine hikes effected in quick succession between 2015 and 2016. The total central excise duty on petrol goes up to Rs 22.98 per litre and on diesel Rs 18.83 per litre. Since they are not covered by the GST, the consumer prices are high also because of the levy of Value Added Tax (VAT) by the states.

The Congress was dismayed at the government making money from the sharp fall in the international prices of oil instead of reducing the prices of petrol, diesel, cooking gas and CNG at the same rates to give relief to the people. The prices of petrol, diesel and all other petroleum products are linked to market and hence they should have been reduced when the crude oil comes at cheaper rate, US $34.9 per barrel, Congress spokesmen Ajay Maken and Randeep Singh Surjewala said.

They demanded at a Press conference here that the retail prices should be rolled back to 2004 June when the crude oil was selling at US $35 a barrel. They said the market equality demands reverting to the prices to June 2004 level when petrol was selling at Rs 35.71 a litre, diesel at Rs 22.74 a litre and non-subsidised LPG cylinder at Rs 412.

The two Congress leaders said it is a sheer loot by the government by continuing with double and triple rates -- Petrol at Rs 69.87 a litre, diesel at Rs 62.58 a litre and LPG cylinder at Rs 858. They pointed out that the excise duty on petrol and diesel was Rs 9.2 a litre and Rs 3.46 a litre respectively in May 2014 that has been now increased to Rs 22.98 and Rs 18.83 a litre respectively.

Maken said that in fact the Modi government has hiked the excise duty on petrol and diesel more than a dozen times since it came to power, the increase being 149.78% on petrol and a whopping 442.22% on diesel, that has been the prime factor in the skyrocketing prices causing the increase in transportation costs and resultant inflation.

The two leaders said the government's excise structure is so skewed that it has led to petrol and diesel becoming costlier than the aviation fuel used in aircraft. Can this government call itself a government for the people when those using scooter, motorcycle, car, tractor, truck and bus have to pay more than the air travelers, they asked.

Asked about the government not transferring the excise duty hike immediately on the consumers, Surjewala said this is to hoodwink the public to force them to pay the high prices instead of lowering them with the drop in the international oil prices.

On the government's claim that the additional revenue earned from the excise duty hike would be spent on the social welfare, Maken asked why not give the money directly to the people that would be better welfare

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