CEA indicates a reduction in fuel taxes is unlikely

The government is unlikely to cut fuel taxes despite petrol crossing ₹100 per litre mark in all metros, hinted Krishnamurthy Subramanian, chief economic adviser to the finance ministry. A cut in fuel taxes, he contended, is unlikely to have a significant impact on retail inflation because of its low weightage in the index.

The bigger concern is food inflation, not fuel, Subramanian said in an interview on Tuesday.

“If you look at the last 6-7 years, anywhere between 35-60% of contribution to retail inflation comes from food inflation,” he said. “Weightage of petrol and diesel in CPI (Consumer Price Index) is less than 3% while weightage of food is about 50%.