In an effort to ease inflationary pressure and boost consumer confidence, the government has decided to reduce the central excise duty levied on petrol and diesel by Rs 1.50 per litre. In addition to this, the oil marketing companies (OMCs) will cut their prices by Re 1, resulting in an effective fuel price cut of Rs 2.50 a litre.
Finance minister Arun Jaitley has said the excise duty cut would have an impact of Rs 10,500 crore on central government’s tax revenues. He also told state governments to follow suit by cutting a sales tax or value-added tax (VAT) by a similar amount. The reduction followed petrol and diesel prices touching new highs.
Jaitley said the move followed Brent crude oil touching four-year high of $86 a barrel on October 03 and interest rates in US reaching seven-year high. However, he added that inflation in India is still moderate at less than 4% and higher direct tax collections give comfort with regard to fiscal deficit. He also said domestic macroeconomic indicators are strong and stable, except for current account deficit (CAD).
