Bowing to public pressure, the government today cut excise duty on petrol and diesel by Rs 2 per litre to moderate the relentless rise in fuel prices witnessed for the last three months.
"Govt of India has reduced Basic Excise Duty rate on petrol and diesel [both branded and unbranded] by Rs 2 per litre w.E.F. 4th October,2017," the finance ministry said in a tweet.
Prices of petrol and diesel will be reduced by the amount of duty cut with effect from tomorrow.
Petrol currently costs Rs 70.88 per litre in Delhi while a litre of diesel is priced at Rs 59.14, the highest ever.
On petrol, the government currently levies excise duties totalling Rs 21.48 per litre while that on diesel is Rs 17.33 per litre.
The government, which had raised duties three years back to take away gains arising from plummeting global oil prices, has been criticised for not cutting excise duty despite a sustained rise in fuel prices since early July.
Petrol price has jumped by Rs 7.8 per litre since July 4, while diesel rates have touched an all-time high after rates went up by Rs 5.7.
"This (excise duty cut) has been done to cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on their retail sale prices," it said in another tweet.
The duty reduction will lead to a Rs 13,000 crore loss of revenue to the government during the remaining period of the fiscal.
A recent ICRA study had said that the petrol and diesel prices have jumped 8 per cent since daily price revision was implemented in mid-June, warning that a sustained price hike can hit demand growth and create inflationary pressures.
Retail selling price of petrol in Delhi showed a 7.9 per cent increase from Rs 65.23 per litre as on June 17 to Rs 70.41.
Besides rise in international oil prices, the increase was also due to a 40 per cent rise in dealer's commission to Rs 3.57 per litre from Rs 2.55 earlier and moderate increase in marketing margins, it said.
With agency Inputs
