Petrol prices continue to rise in Delhi, touches INR 73/litre

The Oil and Gas Regulatory Authority had recommended a double-digit increase in pricesof HSD and other petroleum products

Though the government cut additional excise duty on the fuels by Rs 6 per litre in the Union Budget for 2018=19, Finance Minister Arun Jaitley on Thirsday slapped a new Rs 8 per litre "Levy of Road and Infrastructure Cess" on both petrol and diesel, thereby keeping the total incidence at the same level.

"The budget has changed the tax structure for MS and HSD with more taxes aligned towards Road and Infrastructure cess and less on excise duty, so that adequate funds will be available for the road building programme, without impacting the consumer prices", K. Ravichandran, Senior Vice President and Group head at ICRA said. The rising oil price has brought an end to the three-year-long low price windfall, which allowed the government to increase the excise duty on petrol by Rs 12 per litre and on diesel by Rs 13.77 per litre since April 2014, before making the first cut in October.

Since then prices are revised on daily basis. The move was expected to lessen the impact of rising petrol and diesel prices on a vast consumer base. While the price of diesel is at an all-time high, the price of petrol is highest since the Modi government came to power in 2014.

The government has excluded petrol and diesel from the ambit of GST (Goods and Service Tax). The new prices came into effect at 6 am on February 2.

Previously, Road and Infrastructure cess on motor spirit stood at Rs 6 per litre.

During October month, Moody's said, "There is limited flexibility for the government to reduce taxes further if it were to maintain its fiscal discipline".

CLSA on Jaitley's decision said, "There has been some re-jigging of the excise classification (infra/road cess and basic excise) for petrol and diesel but effectively the overall excise burden is unchanged". The Ministry's overall capital expenditure for FY 19 has been budgeted at Rs 91,663 crore and increase of 10 per cent from FY 18 (RE).

It may ne mentioned that higher crude price comes as a negative outcome for India, as the government is impacted by this trend in two ways.

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