New Delhi: It was widely expected that after the assembly elections, state-owned oil retailers would start increasing the prices of petrol and diesel, thereby increasing fuel costs for consumers. To mitigate this impact, the central government would have needed to cut the excise duty on petrol and diesel, which is still very high — at Rs 27.90 per litre on petrol and Rs 21.80 a litre on diesel.
However, even though oil marketing companies have kept petrol and diesel prices at a constant for four months now, arguing that global crude prices remain volatile due to the Russia-Ukraine war, sources in the finance ministry indicate that the government is unlikely to yield to an excise duty cut as it expects global crude prices to stabilise at around $80-85 per barrel once the war is over.
“For our fiscal calculations, we take the entire year and assume the average price of crude for 12 months. So, the question of an excise duty cut does not arise as of now,” a senior government official told ThePrint on the condition of anonymity.
The official added that as the crude prices are coming down, it is premature to expect a duty cut.
The price of Brent crude — the variant that India imports — slumped Tuesday to an over-two-week low of $98 per barrel, amid hopes of a ceasefire between Russia and Ukraine, and fresh lockdowns in China.
Oil manufacturing companies Indian Oil, Hindustan Petroleum and Bharat Petroleum have not revised prices of petrol and diesel since 4 November 2021, which also coincided with the government reducing excise duty on petrol and diesel by Rs 5 and Rs 10 per litre respectively. In response, many state governments also reduced Value Added Tax (VAT) on petrol and diesel, bringing much-needed relief to consumers.
Even after this reduction, the excise duty on the two fuels is still very high.
In Delhi, petrol is sold at Rs 95.41 a litre and diesel at Rs 86.67, while in Mumbai, petrol costs Rs 109.98 and diesel Rs 94.14 a litre. Prices of both fuels vary across the country depending upon state levies.
On Tuesday, Minister of State for Finance Pankaj Chaudhary told Parliament that the government is keeping a close watch on international product prices, exchange rate, tax structure, inland freight along with the evolving geopolitical developments, and would make calibrated interventions as and when required to safeguard the interests of the common man.
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Decision on import of Russian oil in couple of weeks
Oil Minister Hardeep Singh Puri had Monday told the Rajya Sabha that the government was looking into an offer of discounted oil from Russia.
However, government officials said any decision on importing Russian oil could take a couple of weeks as the proposal is being studied.
“That matter will take some time. We are studying the proposal in detail, and we have to consider our relations with other nations when making such a decision. So, this decision will take place by consulting all stakeholders concerned,” an official told ThePrint.
India imports almost 80 per cent of its oil needs, mainly from Saudi Arabia, and usually buys only about 2-3 per cent from Russia. But with the recent surge in global oil prices, it is looking at the Russian oil offer as it can help reduce the rising import bill.
White House Press Secretary Jen Psaki in a media briefing Tuesday said that India taking up Russia’s offer of discounted crude oil would not violate the US sanctions, but added, “think about where you want to stand when history books are written”.
According to reports, there are indications that Russia will take care of shipping and insurance for delivering the crude oil to India in terms of discount.
(Edited by Gitanjali Das)
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