A day ahead of Diwali, India on Wednesday said the excise duty on petrol and diesel will be reduced from Nov 4, 2021.
The excise duty on petrol has been cut by Rs 5 per litre, and that on diesel by Rs 10 per litre effective Thursday.
“Government of India has taken a significant decision of reducing Central Excise Duty on Petrol & Diesel by Rs 5 and Rs 10 respectively from tomorrow. Prices of petrol and diesel will thus come down accordingly,” said Ministry of Finance in a statement.
The reduction in excise duty on diesel will be double that of petrol. 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 ministry added.
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 ministry said.
Driven by the enterprising ability of India’s aspirational population, the Indian economy has witnessed a remarkable turnaround post the Covid-induced slowdown. All sectors of the economy – be it manufacturing, services or agriculture – are experiencing significant upward economic activity. 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, said government.
States have been urged by the ministry to commensurately reduce VAT on Petrol and diesel to give relief to consumers.
Prior to today’s announcement, the price of petrol in Delhi recently rose to its highest-ever level of Rs 109.34 a litre and Rs 115.15 per litre in Mumbai, according to a price notification of state-owned fuel retailers.
While petrol has already hit the Rs 100-a-litre mark or more in all major cities of the country, diesel had touched that level in over one-and-a-half dozen states.
Prices differ from state to state, depending on the incidence of local taxes and cost of transportation.
The reduction in excise duty will come as a relief as petrol price has been hiked on 25 occasions since September 28, when a three-week-long hiatus in rate revision ended. In all, prices have gone up by Rs 8.15 a litre.
Diesel rates have been increased by Rs 9.45 per litre in 28 hikes since September 24.
Prior to that, the petrol price was increased by Rs 11.44 a litre between May 4 and July 17. The diesel rate had gone up by Rs 9.14 per litre during this period.
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