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No relief: Government rules out excise duty cut on petrol and diesel

Oil Minister Dharmendra Pradhan has ruled out a reduction in excise duty to bring relief to petrol and diesel consumers after prices sharply rose in the past two months.

Petrol and diesel prices have risen Rs 6.03/litre and Rs 3.68/litre respectively since July 1 in Delhi. Petrol is priced at Rs 69.12/litre and diesel Rs 57.01/litre in Delhi, according to Indian Oil Corp website. Prices in other states vary due to local levies but have witnessed a similar hike.

The current prices of petrol and diesel do not warrant a cut in excise duty, Pradhan told reporters. Government does not control the domestic prices of two fuels, which move in tandem with international rates.

Price control on petrol was lifted in 2010 and on diesel in 2014. Until June 15 this year, state oil companies used to fortnightly revise prices to align them with international rates and factor in currency fluctuation though price hikes were skipped or delayed in some fortnights to avoid political controversy especially during polls. From June 16, companies switched to daily revision. This meant the price changes would be so small that it would skip the attention of most consumers or opposition parties.

In the days after the daily price revision was launched, petrol pump dealers strongly opposed it, claiming inventory losses due to price decline hurt profitability and could erode the working capital of small pumps. Petrol fell Rs 2.17 per litre and diesel Rs 1.03 per litre between June 16 and June 30. But their protest withered after prices reversed trend and started climbing up in July resulting in inventory gains and increased profitability. Meanwhile, companies also substantially raised dealers’ commission to buy their cooperation.


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