The Centre on Friday hiked excise duty on petrol by Rs 0.75 per litre and by Rs 2 a litre on diesel, the second increase in duties in less than two weeks, to mop up over Rs 3,700 crore in additional revenue.
The excise duty hike took away most of the gain which should have accrued to consumers from international oil prices slumping to 12 year low.
Because of the excise duty hike, the reduction was limited to 32 paise a litre in petrol and 85 paise in diesel.
Basic excise duty on unbranded or normal petrol has been increased from Rs 7.73 per litre to Rs 8.48 and the same on unbranded diesel from Rs 7.83 to Rs 9.83 per litre, a notification of the Central Board of Excise and Customs (CBEC) said.
The increase in excise duty will fetch the government over Rs 3,700 crore during the remaining period of the current fiscal.
This is the second hike in excise duty in less than two weeks as the government looks to make use of the slump in oil prices to shore up resources at a time when its disinvestment kitty is likely to fall way short of target.
The government had on January 2 hiked excise duty on petrol by Rs 0.37 per litre and by Rs 2 a litre on diesel to mop up a little less than Rs 4,400 crore.
On December 17, 2015, it had raised excise duty on petrol by Rs 0.30 per litre and Rs 1.17 a litre on diesel to garner Rs 2,500 crore.
Taken together with the November 7, 2015 increase in excise duty on petrol of Rs 1.60 per litre and diesel by 30 paise to raise Rs 3,200 crore, this is the fourth hike in levies this fiscal.
In the four increases, the government is expected to mop up over Rs 13,700 crore to meet its budgetary deficit.