Govt Increase Excise Duty as Petrol, Diesel Prices Fall

As the international oil prices continue to slip, state-run oil marketing companies have reduced the prices of petrol by Rs 2.42 and diesel by Rs 2.25 a litre. But the benefit is not transferred to customers as the government has again increased the excise duty by Rs 2 per litre on both petrol and diesel.

This is the ninth time when petrol prices have been reduced since the global crude price started to decline in August. While for the diesel, it's the fifth time that oil companies have reduced the prices since October when govt. deregulated diesel prices in India. The finance ministry has increased the excise duty as it would result in additional revenue of more than Rs 20,000 crore which would help in bringing down the fiscal deficit up to 4.1 per cent of GDP.

In Delhi, petrol now costs Rs 58.91 a litre, the lowest in 44 months, while diesel is now priced at Rs 48.26 a litre in Delhi, the lowest since April 2013.

Earlier on Friday, Petroleum Minister Dharmendra Pradhan said the price cut is not in the hands of government and the state-owned firms will do what is "appropriate".

Global crude oil prices have fallen almost 50% since June 2014, the most since the 2008 financial crisis, as supplies swelled. Petrol and diesel prices were last reduced on December 16 by Rs 2 per litre each. The international crude is now traded at nearly $48 a barrel and according to some market experts, it can further decline to upto $40 a barrel. In June 2014, Crude oil price was at $115 per barrel.