Excise duty on petrol, diesel hiked, will help fund highway programme

The Indian government has raised the excise duty on petrol and diesel by Rs 2 per litre, but with oil marketing companies absorbing the hike, consumers will be spared the burden of a hike in retail prices of the two fuels. With this, total excise duty rise on petrol, after including special excise duty and road cess, will be Rs 14.95 a litre and Rs 7.96 a litre on diesel fuel. The hike is expected to fetch the government additional revenue of Rs 6,000-Rs 7,000 crore between January and March 2015.

This is the third excise duty hike since November 12, 2014 when the duty was hiked by Rs 1.50 per litre, and then on December 2 by Rs 2.25 a litre for petrol and Rs 1 for diesel. The latest hike is a measure designed to fund an ambitious infrastructure development programme in FY2014-15 and FY2015-16 involving 15,000km of road construction and aimed at spurring economic growth and employment generation. The government clearly is capitalizing on the falling global crude oil prices, which have dipped to a four-year low of below $60 a barrel ($57.33), to narrow the fiscal deficit.