The central government has slashed excise duty on petrol by Rs 8 and Rs 6 on diesel to bring down fuel prices and ease inflation. The government also announced a Rs 200 subsidy on LPG for over 90 million consumers who were given connection free of cost under the Ujjwala programme, one of the Modi government’s flagship social welfare schemes launched in 2016.
The Centre will forego £10 billion in tax revenue in current financial year as a result of the cut. The subsidy for Ujjwala consumers will entail an expenditure of £610 million, finance minister Nirmala Sitharaman said while announcing the decisions.
The government also unveiled a series of duty cuts to cool down prices of iron and steel, coal and plastics, while promising to more than double the subsidy allocation for fertilisers to cushion the impact of the Ukraine war on farmers. Along with a reduction in import duty on iron and steel, the finance ministry also imposed import duty on a host of steel products, in a move that will benefit user industries and small-scale players that have been complaining of a massive jump in prices.
The Centre had on November 4, 2021 reduced excise duty by Rs 5 on petrol and Rs 10 on diesel. The latest cut has brought down the excise duty to the pre-pandemic level – rather lower by a few paise. On March 1, 2020, excise duty stood at Rs 19.98 a litre on petrol and Rs 15.83 a litre on diesel. These will now be Rs 19.90 and Rs 15.80 a litre, respectively. The latest cut comes after the Ukraine war resulted in a spike in global prices, which was passed on to consumers resulting in petrol prices crossing the Rs 100 a litre mark and cooking gas cylinders costing over Rs 1,000 in most parts of the country.