Rising crude oil prices remain a cause for concern and a relook at taxes on petroleum products is possible, according to finance minister Nirmala Sitharaman.

“It is a major concern. We are looking at ways in which we can assess what is going to happen. We are keeping a watch on the global fuel situation, particularly the Indian basket,” she says in an exclusive interaction with Fortune India.

In FY21, the Centre collected ₹2,33,296 crore excise on diesel and ₹1,01,598 crore on petrol. This is more than five times the amount collected from diesel (₹42,881 crore) and nearly three times the amount collected from petrol (₹29,279 crore) in FY2015.

On whether a relook at taxation of petroleum and diesel products is possible only after the economy revives, she says, "There can be a re-look even without the economy picking up. If it picks up, it’s all the better. But what will be the outcome of the relook, we will have to wait to hear for it.”

How far will the Centre let fuel prices run away? “I will not be able to say anything on the cut-off. Because a few years ago, petrol at ₹50 a litre, or ₹60, or ₹70 would have been a cause of worry. It is matter of relative position in the economy and component of fuel in inflation-determining basket of goods,” she says.

Sitharaman also drives home the point that the government has “limitations in thinking what can be done about it,” despite the impact on the common man, as it is an imported good and not a luxury like gold.

With the onset of the Covid pandemic, the Centre had increased excise duty on petrol and diesel in March and May last year as a revenue mobilisation measure. This did not have any impact on retail prices as state-run oil marketing firms adjusted the increase against the fall in global crude prices. Ahead of the lockdown in March last year, the excise duty on petrol was ₹22.98 per litre. The Centre raised it to ₹32.90 per litre on February 2 this year. Similarly, excise duty on diesel was ₹18.83 per litre on March 14, 2020. It was raised to ₹31.80 per litre on February 2 this year.

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