Coming ahead of the crucial Delhi elections, a marginal cut in petrol and diesel prices by around 50 to 75 paise a litre each may be announced sometime this week.
Informed government sources told HT that state-owned oil companies could announce a marginal cut in auto fuel prices shortly.
“There could be some relief to consumers... although not very substantial as the rupee-dollar equation has stayed more or less stable and even the global oil prices have staged a marginal fall during the past 10 days... if the fall in oil prices continues for the next few days, a marginal cut of between Rs 0.50 to Rs 0.75 per litre each could be announced,” said a senior government official.
However, sources added that if global oil prices drop any further in February, the government may utilise this fall to mobilise some more finances for the exchequer and go in for a possible hike in customs duty on crude oil by a 5%.
This, they added, could come either ahead or as part of the Budget 2015-16 to be presented by finance minister Arun Jaitley on February 28.
If the reduction in petrol and diesel prices comes this week, it will be the 10th straight reduction in petrol prices since August, and sixth in diesel since October. State-owned oil companies had on January 16 announced a cut in petrol prices by Rs 2.42 a litre and diesel by Rs 2.25 a litre.
The continuous fall in crude oil prices since June last year has so far benefitted the consumer by as much as Rs 14.69 a litre in case of petrol prices and Rs 10.71 a litre in the price of diesel. In Delhi, petrol currently costs Rs 58.91 a litre, the lowest in 44 months and diesel costs Rs 48.26 a litre, the lowest since April 2013.
The reduction in consumer prices of petrol and diesel could have been higher but for the four excise duty hikes announced by the government on petrol and diesel since November 12. Cumulatively customers have been denied the benefit of Rs 7.75 per litre reduction in petrol and Rs 6.50 a litre cut in diesel rates that was warranted due to the slump in global oil prices.
Excise duty on unbranded petrol currently stands at Rs 8.95 per litre while on unbranded diesel at Rs 7.96 per litre.
The four excise duty hikes will result in about Rs 20,000 crore in additional revenue this fiscal and will help the government meet its fiscal deficit target of 4.1 per cent of the GDP.
Global crude oil prices are currently hovering at about $47 per barrel from the highs of $115 a barrel in June 2014.
Sources said the government is likely to re-instate the 5% customs duty on crude oil on the back of falling global oil prices, a move that will shore up government’s revenues further by another few thousand crores. The import duty on crude oil was abolished in June 2011 when global oil prices were ruling high at around $110 a barrel.
“It all depends on how the crude oil prices fair in the coming months....Going by experts, if prices go below $45 to around $40 a barrel, the government may consider re-imposing certain customs duty on crude oil... the duty could be anywhere between 2 to 5%,” a senior government official said.