Petrol prices should have been slashed by Rs 1.04 per litre, while diesel prices should have been cut by Rs 1.53 but the gains were taken away by an excise duty hike.
Petrol price was on Monday slashed by a marginal 4 paise a litre and diesel by 3 paise a litre as the government raised excise duty which will deny consumers full benefit of falling international oil prices.
Now petrol in Delhi would be available for Rs 59.95 per litre as against Rs 59.99 earlier. For diesel, one has to shell out Rs 44.68 for a litre as compared to Rs 44.71 previously, according to Indian Oil Corporation (IOC).
The reduction should have been Rs 1.04 per litre in petrol and Rs 1.53 in diesel because of a $4 per barrel (nearly Rs 271.10) fall in international rates in the last fortnight. But the government on the eve of the due price revision on Sunday raised excise duty on petrol by Rs 1 per litre and that on diesel by Rs 1.50.
The third increase in excise duty in a month will get the government Rs 3,200 crore in additional revenue during the remainder of the current fiscal.
Taken together with the two excise duty hikes in November and December 2015, the government is expected to get Rs 17,000 crore in additional revenue. The five levy hikes total to Rs 4.02 per litre on petrol and Rs 6.97 on diesel.
Petrol price should have been Rs 55.93 a litre and diesel at Rs 37.71 if the excise duties were not hiked on the five occasions.
The reduction in auto fuel prices on Monday was the fifth cut in two months on the back of softening global oil prices.
Rates were last cut by 32 paise a litre for petrol and 85 paise for diesel from January 16. Prior to that, rates were slashed by 63 paise on petrol and Rs 1.06 on diesel on January 1. In two reductions in December, prices were cut by Rs 1.08 on petrol and 71 paise on diesel.
State-owned fuel retailers IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) revise rates of the fuel on 1st and 16th of every month based on average oil price and foreign exchange rate in the preceding fortnight.
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