Cut excise duty on petrol, diesel, FICCI urges government

Economic Survey 2017-18, presented earlier this year, estimated that for every

USD 10 per barrel rise in crude prices, GDP growth would reduce by 0.2-0.3 percentage points, while the current account deficit would increase by 0.4 percentage points of the GDP and WPI inflation climb up by 1.7 percentage points. The impact has already begun to be felt, with diesel and petrol prices soaring to new highs since 2014.

“This will have repercussions on the whole economy, with inflationary pressures on not only fuel but also other goods and services,” Shah said, according to a FICCI release.

“Unless swift action is taken to address the situation, the economic growth will again head towards a speed-breaker,” he said, adding, among the most immediate actions that could be taken by the government was to bring down the excise duty on fuel.

When the global oil prices were down, the government had hiked excise duty on fuel nine times between November 2014 and January 2016, but reduced it only once in October last year, he recalled.

Given that overall excise duties have been raised by as much as Rs 11.77 per

litre for petrol and Rs 13.47 per litre for diesel, while reduction has been mere Rs 2 per litre, there was a scope of bringing down the excise duties, he added.

While such a move will have an implication on the fiscal revenues at this juncture, there was a need to do the fine balancing act, Shah said.

“As per some estimates, every Re 1 litre cut in excise duties results in potential revenue losses of Rs 130 bn (0.1 per cent of GDP),” he added.