A day after the government hiked excise duty on petrol and diesel for the second time in three weeks, Oil Minister Dharmendra Pradhan today said the move was meant to shore up revenue to meet budget deficit without burdening the consumer.
“In legacy we inherited a bankrupt economy. We are committed to providing power to all, water to very village and primary healthcare.
“For this we had to take certain steps (to mobilise money)… some steps have been taken without burdening the consumer,” he said.
The government had yesterday raised excise duty on petrol by Rs 2.25 per litre and by Re 1 a litre on diesel but retail pump rates will not be increased as oil firms decided to absorb the duty change for the time being.
The second excise duty hike in three weeks will help raise an additional Rs 4,000 crore in four months to March as the government seeks to take advantage of a slump in global oil prices to shore up its revenues without stoking inflation.
Together with Rs 1.50 a litre excise duty hike on both petrol and diesel with effect from November 12, the government will mop up about Rs 10,000 crore in remaining period of the current fiscal that will help contain budget deficit.
Pradhan said if international oil prices continue to slide, the benefit will certainly be passed on to consumers.
International crude prices were ruling at USD 107 per barrel when the NDA government came to power in May. It went up to USD 115-117 per barrel at the height of Iraq crisis but have since retreated to below USD 70, he said at an Assocham event here.
The slump led to petrol prices being cut seven times since August and diesel on three occasions in last one-and-half-months, he said.
The oil firms had on December 1 cut petrol and diesel prices by 91 paise a litre and 84 paise per litre, respectively to factor in slump in international oil prices.
The seventh reduction in price since August made petrol cost Rs 63.33 a litre in Delhi, Rs 10.27 per litre less than what it was in July.
The third reduction in diesel rates in one month has led to the price coming down to Rs 52.51 a litre.
Brent rates, the benchmark grade for more than half of the world’s oil, have dropped to USD 68.34 a barrel, the lowest level since October 2009.
Prices declined 18 per cent last month and are 38 per cent lower in 2014.
Pradhan said the government is committed to easing business environment so that manufacturing gets a boost and more jobs are created.