Relief for common man: How FM's announcements will impact your finances

Amid rising inflation and stressed household budgets, the Centre on Saturday announced a slew of measures aimed at helping the common man bear the financial burden. The highlight of the announcements was the sharp cut in excise duty on petrol and diesel by Rs 8 per litre and Rs 6 per litre. Other measures include LPG subsidy and reductions on custom duties.

The announcements will bring relief to common man, give impetus to several sectors and improve ‘Ease of Living’ for the citizens, Prime Minister Narendra Modi said after the Union Finance Minster announced the measures.

Here’s a low down on the government’s announcements and the broad effect on finances for the crores of households in the country.

Ujjwala Yojana has helped crores of Indians, especially women. Today’s decision on Ujjwala subsidy will greatly ease family budgets. https://t.co/tHNKmoinHH

— Narendra Modi (@narendramodi) May 21, 2022

Sharp excise cuts in petrol, diesel prices

The biggest measure of all was the reduction in the excise duty that the centre charges on petrol and diesel. With the massive reductions to ease the price burden of fuel, the move will lower food prices and counter some of the inflation impact on household budgets. FM Sitharaman said that the excise duty cuts will have a revenue implication of around Rs 1 lakh crore per year.

Furthermore, the effective rate of Value Added Tax (VAT) levied by states on petrol and diesel will also come down with the excise duty reductions. Centre imposes excise duty which states use VAT levy for similar purposes. The VAT automatically comes down with reduction in excise duty.

READ | Petrol, diesel prices today - List of fuel rates in major cities after excise, VAT cuts

LPG subsidy for 2022

The second major announcement is the provision of subsidy on LPG cylinders under the Pradhan Mantri Ujjwala Yogana. FM said the move will support our ‘mothers and sisters’, while the PM asserted it will greatly reduce family budgets.

As per the announcement, the Centre will provide Rs 200 subsidy per cylinder (up to 12 cylinders) this year. The move is expected to benefit 9 crore people under the PM Ujjwala scheme. The annual revenue implication of this measure will be Rs 6100 crore, the FM added.

READ | After FM announces excise duty cuts on fuel, Congress accuses Centre of ‘fooling’ people

Additional fertiliser subsidy

The Centre’s budget carried an amount of Rs 1.05 lakh crore for fertilizer subsidy to farmers across the country. In the new announcements, an additional amount of Rs 1.10 lakh crore has been set aside. Prices of fertilizers have risen globally, in part due to the ongoing Russia-Ukraine conflict. The Centre’s move will further protect farmers from the international price rise impact. The move can also positively impact farm produce and cost of vegetables and grains in the market.

Reduction in custom duties

The FM also announced that customs duty will be reduced on certain products where India has a high dependence on import. This includes raw materials and intermediaries for plastic products, a move that will cut down the cost of final products. The move will also help business owners related to plastic products industry and hopefully the benefit will also pass on to consumers.

Custom duties have also been reduced on raw materials and intermediaries for iron and steel. This will bring down prices of iron and stell products, helping various industries.  Furthermore, reduction in import duty on some raw materials of steel has also been announced along with expected export duty on some steel products.

(With inputs from agencies)