The government has finally succumbed to resentment and disappointment of public over fuel prices. The finance ministry announcement on Tuesday on Twitter says the basic excise duty rate on petrol and diesel (both branded and unbranded) will be reduced by Rs2 per litre with effect from today. The finance ministry also said that the move has been done to cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on their retail sale prices. “Revenue loss on a/c of these reductions in excise duty is about Rs26,000 crore in full year and Rs13,000 crore in remaining part of the current financial year. This decision has also been taken by the Government of India in order to protect the interest of common man,” the ministry tweeted.
Earlier, due to the increase in the international prices of Petrol and Diesel, during the last few weeks, the Retail Selling Prices (RSP) of Petrol and Diesel at Delhi have risen to Rs70.83/litre and Rs59.07/litre respectively, as on October 2, 2017. This rise in the prices of Petrol and Diesel is also reflected in WPI inflation, which has increased to 3.24% for the month of August 2017, as compared to 1.88% for the month of July 2017.
This also prompted the government to act swiftly in this regard. In September, petrol prices had reached an all-time high. Union minister for petrol Dharmendra Pradhan ruled out government intervention to disrupt the daily revision in petrol and diesel prices despite Rs7.3 per litre spike in rates since July, saying the reform will continue. He however remained non-committal on cutting taxes to soften the blow of relentless rise in prices since July 3, the government need to finance huge infrastructure and social projects has to be balanced with consumer needs. Terming the criticism of spike in rates as unfair, he said the drop in prices for over a fortnight after the daily price revision was introduced on June 16 has been ignored and only “temporary” phenomenon of rising trend is being highlighted.
The government was under tremendous pressure not only from the opposition but was also facing increasing public ire over the steady rise in petrol prices. The incessant rise had put the government in an awkward position and there was public pressure to effect a cut in the prices.
Seizing the opportunity, the Congress has launched a series of protests in Rajasthan and other parts of the country. The protests had struck a chord with the public and the BJP government at the centre was not in a position to let Congress score brownie points, especially as Gujarat and Himachal Pradesh are all set to go to polls.
Adding to its woes, the government has to face severe onslaught from within its ranks, when senior leader Yashwant Sinha went on record to criticise the government over the poor fiscal health of the country. Sinha’s criticism was welcomed by P Chidambaram and the Finance minister Arun Jaitley had to himself come out and defend the government. The situation was not a comfortable one and the government moved to effect a cut in the excise duty with the hope that the discontent would be contained.
