In a slew of measures to control the rising inflation in the economy, the central government today announced a reduction in the central excise duty on petrol and diesel, ₹200 subsidy on LPG gas cylinders, among others measures. The excise duty cut on petrol and diesel and subsidy outgo on LPG cylinders will cost over ₹1 lakh crore to the central government.
“We are reducing the central excise duty on petrol by ₹8 per litre and diesel by ₹6 per litre. This will reduce the price of petrol by ₹9.5 per litre and of diesel by ₹7 per litre. It will have a revenue implication of around ₹1 lakh crore/year for the government,” finance minister Nirmala Sitharaman said in a tweet a short while ago.
“Also, this year, we will give a subsidy of ₹200 per gas cylinder (up to 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 ₹6,100 crore a year,” says Sitharaman in a series of tweets, while exhorting all state governments to take similar initiatives to provide relief to the common man. She specifically exhorted the states, where the reduction wasn’t done during the last round (November 2021), to also implement a similar cut and give relief to the common man.
“We are also reducing the customs duty on raw materials and intermediaries for plastic products where our import dependence is high. This will result in a reduction of cost of final products,” says Sitharaman.
“Similarly, we are calibrating customs duty on raw materials and intermediaries for iron and 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,” she adds.
The Russia-Ukraine war has worsened the supply disruption caused by the pandemic and catapulted the energy prices through the roof, creating a price spiral in every segment of the economy.
At 7.79% in April, retail inflation was at an eight-year high, as per data from the National Statistics Office. Similarly, the food inflation rate at 8.38% in April 2022 grew more than four times from 1.96% in April 2021.
Additionally, in the 13th consecutive month of double-digit growth rate, the wholesale price index (WPI) based inflation was at a nine-year high at 15.8% in April this year, up almost 50% from 10.74% in April 2021.