To take the benefit of the blood bath in the global oil market, the government has today raised the cap on additional excise duty on petrol to Rs 18 per litre and diesel to Rs 12 per litre. This is an increase of Rs 8 per litre on the previous level of Rs 10 per litre on petrol and Rs 4 per litre on diesel. The rise in cap will allow the government to increase the excise duty which may or may not increase the retail prices of petrol and diesel but will definitely minimise the benefits that the common man could have got, given the freefall in crude oil prices in the international market.
The decision took place in the amendment to the Finance Bill, 2020, which today passed in Lok Sabha. Finance Minister Nirmala Sitharaman today presented the amendment, which passed without the debate. Earlier this month, while it was expected that the retail prices of petrol and diesel may come down, the government had raised Rs 2 per litre increase in special additional excise duty and Re 1 in road and infrastructure cess in the price of petrol and diesel.
While the global demand has witnessed a steep fall amid Covid-19 pandemic and many countries have locked down itself, the oil producers are not ready to cut the supply, generating a glut of oil and flooring the prices. “Global oil and gas markets are facing an unprecedented situation: demand is collapsing because of the impact of the coronavirus while supply, already overabundant, is significantly increasing,” said International Energy Agency (IEA).