Chief Economic Adviser suggested status quo on excise duties till oil prices climb to $65
Date: Jul 05 , 2016
New Delhi: If Government of India goes by the suggestion made in approach paper submitted by Chief Economic Adviser, there may not any cut in excise duty on petrol and diesel in the near-term, as CEA suggested in the paper for maintaining status quo when oil prices can climb by another $15 a barrel
Sources said the CEA suggested status quo on excise duties till oil prices climb to $65 per barrel, from the present $ 49 levels.
Any rise in prices above $65 a barrel should be equally borne by the consumers and the government; consumers by way of paying higher retail rates and the government by cutting excise duty on the two auto fuels.
If crude oil price were to average $65 a barrel from July to end of the year, half of the burden on the fiscal would be Rs 46,000 crore, or 0.3 per cent of GDP, CEA said in the approach paper.
Every incremental $5 per barrel increase in global oil prices would translate into a Rs 2-2.1 per liter increase in retail prices if the 50:50 burden sharing mechanism is followed. Every Re 1 cut in excise duty would cost the exchequer Rs 3,500 crore on petrol and Rs 9,000 crore on diesel for the full year.