Budget 2018: Some relief to the middle class will come as Finance Minister ArunJaitley announced an excise duty cut on petrol and diesel by Rs 2 per litre in the Budget 2018. The oil ministry had demanded excise duty cut from the finance ministry on the back of rallying crude oil price. The petrol price in Mumbai recently has breached Rs 80 per litre mark and diesel price is at a record high.
According to the Finance Bill 2018, the government announced a reduction of excise duty on unbranded and branded petrol and diesel by Rs 2 per litre. The last excise duty cut was announced in October last year when the petrol price was just 1 paisa short of hitting the Rs 80 per litre mark. However, in three months since then, the price of Brent crude oil price rose to more than $13 per barrel and the fuel price, subsequently, shot up by over Rs 3 per litre, completely reversing the impact of the cut.
The Brent crude oil is currently hovering over $68 per barrel, after topping $70 mark in mid-January. Oil analysts expect the price to further go up to $80 per barrel or even $100 per barrel. The rising oil price has brought an end to the three-year-long low price windfall which allowed the government to increase the excise duty on petrol by Rs 12 per litre and on diesel by Rs 13.77 per litre since April 2014, before making the first cut in October. As the government is estimating a fiscal slippage in the fiscal year 2017-18 by 0.3 percentage points, Arun Jaitley has fixed the target for the fiscal year 2018-2019 to 3.3%.
Last week, the Economic Survey 2018 flagged concerns over the rising crude oil price, saying that every $10 rise affects the GDP growth by 0.2-0.3% percentage points and increased the Current Account Deficit (CAD) by $9-10 billion. India imports 82% of its oil requirement and Brent crude oil makes up for 28% of total imports. Oil Minister Dharmendra Pradhan had been long demanding to bring the fuel under the ambit of the GST. The GST Council is likely to deliberate upon the decision in upcoming meetings.
