Petrol, diesel prices to come down as govt slashes excise duty

In a big gift to the people, the central government has slashed the excise duty on petrol and diesel. Consumers can get a relief of Rs 10 on diesel and Rs 5 on petrol. The new rates will come into effect from Thursday.

States have also been urged to reduce VAT on petrol and diesel to give relief to consumers. The announcement from the government comes on the eve of Diwali.

"To give a further fillip to the economy, the Government of India has decided to significantly reduce the excise duty on diesel and petrol. The reduction in excise duty on Petrol and Diesel will also boost consumption and keep inflation low, thus helping the poor and middle classes. Today’s decision is expected to further spur the overall economic cycle. The reduction in excise duty on petrol and diesel will boost consumption and keep inflation low, which will help the poor and middle class, it added. Today's decision is expected to give more momentum to the entire economic cycle, said the government. In order to give relief to the consumers, states have also been appealed to reduce VAT on petrol and diesel," a statement from the Ministry of Finance read.

The ministry added that crude prices have increased globally and the world has also seen shortages as well as increased prices of all forms of energy.

"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. The world has also seen shortages and increased prices of all forms of energy. The Government of India has made efforts to ensure that there is no energy shortage in the country and that commodities such as petrol and diesel are available adequately to meet our requirements," the statement added.

The reduction in diesel prices will be a big relief for the farmers during the upcoming Rabi season. "The Indian farmers have, through their hard work, kept the economic growth momentum going even during the lockdown phase and the massive reduction in excise on diesel will come as a boost to the farmers during the upcoming Rabi season," the government said.

Can there be a further decrease in the prices of petrol and diesel?

It wouldn't be wrong to consider the reduction in excise duty on petrol and diesel as a Diwali gift from the Prime Minister of India, Narendra Modi. Experts state that this decision by the PM demonstrates the sensitivity of the government in general to the ground situation and the consequent decision-making in real-time.

Not only that, but the reduction in excise duty on petrol and diesel will also help in boosting consumption and keep inflation low, thus helping the poor & middle classes.

What would make this decision by the Centre even more worthwhile is if state governments also reduce the VAT imposed on the fuel.

For example, the VAT charged on petrol in Delhi is 30%, Mumbai is 26% plus an additional 10.12 / litre, in Kolkata is 25% or Rs. 13.12 / litre whichever is higher and in Hyderabad is as high as 35.20%. The VAT rates in Congress-ruled Rajasthan are 36% plus Rs. 1,500/Kl.

Meanwhile, VAT rates in BJP ruled states such as Gujarat stand at 20%. Therefore, it is only fair that the opposition-ruled states coordinate with the center’s positive decision and further decrease VAT rates on both petrol and diesel for the benefit of the common man.

Source : DNA India