Currently, the Center’s taxes on petrol and diesel are Rs 27.9/litre and Rs 21.8/litre respectively.
The government told parliament on Tuesday it will take calibrated measures to control fuel prices for cars. “The government is closely monitoring these factors and evolving geopolitical developments, and would make calibrated interventions if necessary to protect the interests of the common man,” Finance Minister Pankaj Chaudhary told the Rajya. sabha. Fuel prices for cars, although formally deregulated, have not changed since November 4, 2021.
India’s crude oil basket rose from about $83 a barrel in early November to a peak of $128 a barrel on March 9, before falling to $110 a barrel on Monday. Currently, the Center’s taxes on petrol and diesel are Rs 27.9/litre and Rs 21.8/litre respectively. Of these, the special additional excise duty is Rs 11/litre and Rs 8/litre on petrol and diesel respectively. Prices have been put on hold in the context of the parliamentary elections for five states that closed on March 7.
Oil prices have plummeted this week, taking some pressure off inflation sweeping the world, with a barrel of Brent oil dropping below $100 a barrel Monday, after hitting $140 last week.
With commodity prices hardening after the Ukraine-Russia conflict, Indian wholesale price inflation (WPI) reversed course in February 2022 and rose to 13.11% after reaching 12.96% in January. Retail inflation in February also rose marginally to 6.07% from 6.01% in the previous month, hovering above the upper bound of the RBI’s inflation target of 2%-6%.
The weight of “crude oil and natural gas” and “fuel and power” subgroup (which includes gasoline and diesel) in WPI is 13.15% and 2.41% in CPI. Changes in global crude oil prices have both a direct and an indirect impact on the various components of the WPI and CPI.
It is a difficult choice for the government to either cut excise taxes on diesel and gasoline and forgo huge amounts of tax revenue, or let the oil marketing companies raise the sales prices of auto fuels. It can also choose a judicious combination of both steps.
The public oil marketing companies (OMCs) make gasoline and diesel pricing decisions in accordance with their international product prices, exchange rate, tax structure, barge freight and other cost elements, Chaudhary said in a written response.
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