Will petrol, diesel prices fall after the announcement of Union Budget 2018? Due to skyrocketing fuel prices, the Union oil ministry may be looking to cut excise duty on petrol and diesel in the upcoming Union Budget 2018. The move is aimed to lessen the impact of rising fuel prices on a vast consumer base, Reuters reported, quoting two oil ministry officials.
Petrol prices continued to rise in the country on Tuesday, reaching a new three-year high in all cities. The price of petrol in Mumbai on Tuesday is Rs 80.25 per litre, in Delhi it is Rs 72.38 per litre and in Kolkata and Chennai, it is Rs 75.09 per litre and Rs 75.06 per litre, respectively.
With elections in key states just around the corner, the rise in retail prices of petrol and diesel to record levels is putting pressure on the current NDA government, which has its eyes on the 2019 Lok Sabha election as well.
"We can only recommend. It is up to the finance ministry to take a decision," a senior oil ministry official told Reuters about the excise duty cut in Budget 2018.
Mumbai is bearing the maximum burden of the rise in global oil prices. The price of petrol in Mumbai touched Rs 80 per litre on Monday for the first time since August 2014. When compared to other metros in the country, the price of petrol and diesel in Delhi is the lowest of all.
If the government goes for an excise duty cut in the coming Union Budget 2018, consumers will definitely get relief, but it will negatively affect the revenue growth of the government.
As the government is struggling to address a widening fiscal gap amid falling tax revenues due to the implementation of the goods and services tax (GST) regime, a cut in excise duty on fuel would pose challenges.
India raised the excise duty on fuel many times between November 2014 and January 2016. The NDA government lowered the excise duty on petrol and diesel only once in its tenure and that was in October 2017.
The government had cut excise duty by Rs 2 per litre when Indian states saw a considerable increase in both petrol and diesel prices.
The government is also planning to bring petrol and diesel under the GST regime. The GST panel may consider a proposal regarding this during its next meeting.