Government reduces excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre

This will reduce the price of petrol by Rs 9.5 per litre and of Diesel by Rs 7 per litre. The move will have revenue implication of around Rs 1 lakh crore per year for the government.

“Today, the world is passing through difficult times. Even as the world is recovering from Covid-19 pandemic, the Ukraine conflict has brought in supply chain problems and shortages of various goods. This is resulting in inflation & economic distress in a lot of countries,” she said in a series of tweets.

“While the excise cut on petrol will have revenue implication of around Rs 1 lakh crore per year for the government, subsidy on gas cylinder will cost a revenue Rs6100 crore a year to the exchequer,” categorically highlighted the finance minister.

“Keeping in line with the government’s ‘commitment to help the poor & common man, today, we are announcing more steps to help our people,” read FM’s post.

‘The welcome reduction in excise duty will help to cool the inflation trajectory going ahead, and complement monetary policy. We project the may 2022 cpi inflation at between 6.5-7.0%. The fiscal cost, while material, can be absorbed by higher than budgeted revenues through other taxes. We now estimate the tax revenues of the GoI to surpass the budget estimates by at least Rs. 1.3 trillion even after the excise reduction,” expressed Aditi Nayar, Chief Economist, ICRA.

Here are the other key takeaways-

– This year, the govt will give a subsidy of Rs 200 per gas cylinder (upto 12 cylinders) to over 9 crore beneficiaries of Pradhan Mantri Ujjwala Yojana. This will help our mothers and sisters. This will have a revenue implication of around Rs 6100 crore a year.

– The Centre is also reducing the customs duty on raw materials & intermediaries for plastic products where our import dependence is high. This will result in reduction of cost of final products.

– On a similar note, the Centre is also calibrating customs duty on raw materials & intermediaries for iron & steel to reduce their prices. Import duty on some raw materials of steel will be reduced. Export duty on some steel products will be levied.

– On the availability of cement, she said measures are being taken up to improve the availability of cement and through better logistics to reduce the cost of cement. Notifications with specific details on all the above will be issued by government within the next hour.

Sitharaman went on say that despite the challenging international situation, the government has ensured that there are no shortages or scarcity of essential goods. Even a few developed countries couldn’t escape some shortages or disruptions, she added.

April saw India’s wholesale and consumer prices accelerate at their fastest in years, prompting the central bank to hike interest rates at an unscheduled policy meeting this month.