With Finance Bill passed, govt can increase petrol, diesel prices

Source PPAC & Emkay Global

Source PPAC & Emkay Global

This compares to present limit of Rs 10 and Rs 4 for petrol and diesel respectively. By imposing the new excise duty, the retail price and diesel may increase by ₹ 5 to ₹ 6 per litre whereas the remaining will be borne by the public sector oil market firms that have been reducing the prices for the petroleum products on daily basis, which is in-line with the falling global oil prices.

Crude Oil prices are at an all-time low in the global markets.

The authorities had earlier introduced a hike of Rs three per liter in excise obligation on each fuels on 14 March. It is also important to note that any such increase in petrol and diesel retail prices could harm the economy, which is already facing a slowdown. The authorities has elevated the particular excise obligation on petrol from Rs 10 to Rs 18 and on diesel from Rs four to Rs 12. Price rise of auto fuels could have a multiplier effect, raising prices of several essential products and services and pushing up inflation. This has also been raised by ₹8 per litre on the two products to ₹18 per litre.

The government had on March 14 raised excise duty on petrol and diesel by ₹3 per litre each to raise an additional ₹39,000 crore in revenue annually.

Finance Minister Nirmala Sitharaman took authorisation Monday to raise excise duty on petrol and diesel by Rs 8 per litre each in future as Parliament passed the Finance Bill, 2020, that also allowed pension funds to be treated like sovereign wealth funds.

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In the Union Budget 2020-2021, the federal government proposed to spend Rs 30,42,230 crore in 2020-21, which is 12.7 % increased than the revised estimate of 2019-20.

The decrease in petrol prices is now at its lowest recorded since April 2016, with a further decrease in diesel prices now at their lowest recorded since September 2016.

Supermarkets Asda and Morrisons have reduced their fuel prices by 12p per litre for petrol and 8p per litre for diesel.

They were also heavily dented when Saudi Arabia, which produces around 10% of the world's oil, chose to slash prices and ramp up production in a trade war with Russian Federation. "The consumption of both diesel and petrol will go down and this situation is unlikely to change over the next 15 day or a month", Sunil Kumar Sinha, the principal economist at India Ratings, told The Indian Express.

This story has been published from a wire agency feed without modifications to the text.

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