Petrol, diesel prices may not be hiked with room to cut excise duty

NEW DELHI: Fuel prices in the country may not be hiked as is being feared since the government has room to further cut excise duty on petrol and diesel without impacting the revenue target from tax on these two items. This means citizens may not immediately bear the brunt of boiling crude prices in the international market. If one goes by the excise duty collected by the government, it has already mopped up Rs 30,17,46 crore from April 2021 to January 2022.

In 2020-21, the government collected Rs 38,9662 crore excise duty tax in the entire year. If it is compared with this year’s excise duty collection, it is only Rs 87,916 crore short. This, many believe, will be easily covered in the next two months ending this fiscal. “An excise cut would absorb a fair chunk of the lagged adjustment required in fuel prices, reducing the inflationary impact of the spike in crude prices,” said Aditi Nayar, chief economist, ICRA Ratings.