In a bid to take advantage of a slump in global oil prices to five-year low to shore up revenue without stoking inflation, the government raised excise duty on petrol and diesel by Rs 2 per litre . Excise duty on normal or unbranded petrol has been hiked from Rs 4.95 per litre to Rs 6.95 a litre and on unbranded diesel from Rs 3.96 to Rs 5.96 a litre. Similarly, excise duty on branded petrol has been raised from Rs 6.10 to Rs 8.10 a litre and on branded diesel from Rs 6.25 to Rs 8.25 per litre.
The move to hike excise duty by third time since November will help raise additional Rs 6,000 crore during remaining three months of the current fiscal. The excise duty hike has offset the reduction that has become necessary as international oil rates plunged to their lowest level since May 2009 owing to the oversupply in international markets.
The government’s notification highlighted that in order to fund the ambitious infrastructure development programme of the government, particularly the building of 15,000-km of roads, during current and next financial year, it has decided to increase basic excise duty on petrol and diesel by Rs 2 per litre. Allocation of these resources to the road sector will also spur economic activity and employment generation arising from the road construction sector, the notification added. With three excise duty hikes since November, the government will mop up about Rs 17,000 crore this fiscal to contain fiscal deficit.