Petrol price cut by Rs 5, diesel by Rs 10 as govt slashes excise duty on Diwali eve

FPJ News ServiceUpdated: Wednesday, November 03, 2021, 11:06 PM IST
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You can grin on the eve of Diwali: the government has finally decided to mitigate common man’s misery by reducing the excise duty on petrol and diesel by Rs 5 and Rs 10, respectively. With effect from Thursday.

The reduction in excise on diesel is double that of petrol and will hopefully cheer up farmers during the upcoming Rabi season.

(Excise duty on petrol was hiked from Rs 19.98 per litre to Rs 32.9 last year to recoup gain arising from international oil prices which plunged to a multi-year low as pandemic gulped demand.)

According to sources, the government was driven more by its own pragmatic reasons and less by altruism. Spiraling inflation driven by fuel hike could upset the post-pandemic economic momentum; it could send for a toss prices of other goods — from daily essentials to luxury products; and this, in turn, would have depressed consumer demand.

"In recent months, crude oil prices have witnessed a global upsurge. Consequently, domestic prices of petrol and diesel had increased, exerting inflationary pressure,’’ a government statement said, trying to give the rationale for the abrupt decision. Higher inflation could also jeopardize the Reserve Bank of India’s plan to maintain a low interest rate regime that has helped the economy recover substantially after two waves of the pandemic, media sources pointed out.

All these months, the government had defended the higher taxes – possibly the highest in the world -- disregarding the public outcry. But more than anything the by-poll election results may have a bearing on the ‘rethink’.

The other more enduring option was to bring petroleum products under the ambit of GST, which was expected to significantly reduce petrol and diesel prices; but that was easier said than done.

The decision may be seen as a Diwali concession for frayed consumer nerves, though earlier this week, prices of LPG cylinders had been hiked by oil marketing companies by Rs 266.

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