Even as the opposition parties are trying to corner the government over the issue of rising fuel prices, which is making hole in the pockets of the common man, Centre’s excise collection on petrol and diesel in FY21 has witnessed an 88 percent jump.
The Centre earned a whopping Rs 3.35 lakh crore in FY21 as against Rs 1.78 lakh crore in FY20, this on account of an increase in excise duties. ICRA in its report had recently highlighted that there is room for a cut in excise by the Centre as it expects higher fuel consumption in FY22.
Even as provisional data shows the decline in petrol consumption by 6.8 percent on petrol and 12 percent on diesel in FY21. Excise collection on petrol jumped 53.29 percent in FY21 at Rs 1.01 lakh crore versus Rs 66,279 crore in FY20. Similarly, excise collection from diesel saw a huge jump of 108.24 percent at Rs 2.33 lakh crore in FY21 against Rs 1.12 lakh crore in FY20.
The excise duty was hiked to Rs 32.98 per litre on petrol and Rs Rs 31.83 per litre on diesel in May 2020 from pre-covid levels of Rs 22.98 per litre and Rs 18.83 per litre respectively.
The Centre argues that the excise duty rates have been calibrated to generate resources for infrastructure and other developmental items of expenditure keeping in view the prevailing fiscal situation.
Meanwhile, as per the ICRA report in June this year, it expects petrol consumption to grow 10 percent and diesel at 14 percent which could give room for a cut in duties by Rs 4.5 per litre without revenue loss to the central government.
"Higher consumption of fuels should support a rise in the indirect taxes levied on them, affording a window for a partial reversal in the cess hikes that were imposed last year. Our calculations suggest that the cesses levied on petrol and diesel could be reduced by Rs 4.5/litre each while maintaining the total cess revenues of the GoI on these fuels in FY2022 at the FY2021 level. Such a cut in the cess rates would offer some relief to household budgets and ease the inflationary pressures related to the rising global crude oil price," said Aditi Nayar, chief economist, ICRA.
Rameshwar Teli, minister of state for petroleum and natural gas in a written reply to the Lok Sabha said, "The impact of the increase in prices of petrol and diesel can be seen in their impact on inflationary trend measured by Wholesale Price Index (WPI). The weightage of petrol, diesel and LPG in the WPI index is 1.60 percent, 3.10 percent and 0.64 percent respectively."
The excise duties currently stand at Rs 32.90 per litre for petrol and Rs 31.80 per litre for diesel. The total central excise duty collection on petrol and diesel from April to June in 2021 has reached about Rs 94,181 crore as per reply by the ministry of finance to the Parliament.
First Published: IST