Govt slashes excise duty on Diesel by Rs 10, Petrol by Rs 5

Government has taken a significant decision of reducing Central Excise Duty on Petrol by five rupees and Diesel by ten rupees from Thursday. This is the first cut in central excise duties in over three years. Finance Ministry said, the prices of petrol and diesel will come down accordingly. The reduction in excise duty on diesel will be double that of petrol. The Ministry said, the farmers have kept the economic growth momentum going even during the lockdown phase through their hard work. It said, the massive reduction in excise on diesel will come as a boost to the farmers during the upcoming Rabi season.The Ministry said, the reduction in excise duty on Petrol and Diesel will also boost consumption and keep inflation low, thus helping the poor and middle classes. It said, today’s decision is expected to further spur the overall economic cycle. The Ministry has also urged States to commensurately reduce VAT on Petrol and diesel to give relief to consumers.Petroleum minister Hardip Singh Puri ina tweet has asked the state governmenments to reduce their part of VAT on petrol, diesel to give relief to commonman. 

I thank PM @narendramodi Ji for the significant reduction in Excise Duty on Petrol & Diesel. A big relief for fuel consumers, particularly our farmers just ahead of Rabi season. The states should add to this celebration by reducing VAT on fuel to give further relief to consumers.

— Hardeep Singh Puri (@HardeepSPuri) November 3, 2021

In recent months, crude oil prices have witnessed a global upsurge. Consequently, domestic prices of petrol and diesel had increased in recent weeks exerting inflationary pressure. Finance Ministry said, the world has also seen shortages and increased prices of all forms of energy. It said, the Government has made efforts to ensure that there is no energy shortage in the country. The government had last cut excise duties in October 2018 when crude oil prices had reached $84 per barrel, pushing the price of petrol to Rs 84 per litre and the price of diesel to Rs 75.5 per litre in the national capital. According to experts while the price of petrol rose by 46.4 per cent and that of diesel by about 45 per cent since January 2020, the price of crude oil has risen by only 20 per cent. Between February and May last year, the government increased excise duties on petrol and diesel by Rs 13 per litre and Rs 16 per litre respectively amid a sharp decline in revenues due to the Covid pandemic and related restrictions.

Nine BJP-ruled states - Assam, Tripura, Manipur, Karnataka, Goa, Uttar Pradesh, Gujarat, Himachal Pradesh and Uttarakhand - announced additional cuts in petrol and diesel prices hours after the Centre reduced excise duty on petrol and diesel.