A day after the electoral debacle in the by-polls, the Centre reduced the excise duty on petrol and diesel by ₹5 and ₹10 respectively with effect from tomorrow. This will provide reprieve to the common folk, who had been shelling out more than a hundred rupees per litre for fuel in many parts of the country for the past several weeks.

“The Government of India has taken a significant decision of reducing Central Excise Duty on Petrol and Diesel by ₹5 and ₹10 respectively from tomorrow. Prices of petrol and diesel will thus come down accordingly,” states a release from the ministry of finance a short while ago.

“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,” reads the release, adding that the centre has also urged the states to commensurately reduce VAT on Petrol and diesel to give relief to consumers.

“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 release adds.

According to the ministry, given the economic revival being witnessed across various sectors, a reduction in fuel prices will provide an additional fillip. “The Indian economy has witnessed a remarkable turnaround post the Covid-19 induced slowdown. All sectors of the economy—be it manufacturing, services or agriculture—are experiencing significant upward economic activity. To give a further fillip to the economy, the government has decided to significantly reduce the excise duty on diesel and petrol,” says the release, adding that a massive reduction in excise on diesel will come as a boost to the farmers during the upcoming Rabi season.

Amid the pandemic and the falling global crude oil prices last year, the Centre hiked excise duty on petrol and diesel in two tranches in March and May last year as a revenue augmentation measure. Ahead of the lockdown in March last year, the excise duty on petrol was at ₹22.98 per litre. The Centre raised it to ₹32.90 per litre on February 2 this year.

Similarly, the excise duty on diesel was at ₹18.83 per litre on March 14, 2020. It has been raised to ₹31.80 per litre as of February 2 this year. It may be noted that in 2020-21, the central government collected ₹2,33,296 crore through excise duty on diesel and ₹1,01,598 crore through excise on petrol. Excise duty collection on diesel has gone up by more than five times from ₹42,881 crore in 2014-15, while the collection on petrol has jumped more than three times from ₹29,279 crore in 2014-15.

The move comes a day after the BJP lost out to Congress in all seats that went to polls in Himachal Pradesh and Rajasthan by-polls, while the Trinamool Congress swept all seats in West Bengal.

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