The sharp hike in excise duty for auto fuels – petrol and diesel – is likely to add Rs 1.4 trillion to the government’s kitty, says the latest report by Barclays. The projection assumes that demand for both petrol and diesel will fall 12 per cent in FY20-21 as the economic activity in the country gets hampered on account of the Covid-19 related shutdown.
Apart from the increase in central government taxes, several states and union territories, including Delhi, Haryana, Assam, Punjab, also have raised the state tax on fuel. This is likely to result in a modest rise in fuel prices to rise modestly, given that the increase in the government’s tax should not lead to higher fuel prices owing to the significant drop in crude oil costs through April.
