Following Reduction in Excise Duty, Fuel Prices Drop Drastically in Last Week
- 26-May-2022 5:11 PM
- Journalist: Motoki Sasaki
After finance minister Nirmala Sitharaman made an announcement on Saturday regarding a significant drop in the federal excise duty paid on petrol by Rs. 8/litre and Rs. 6/litre on Diesel, the prices of both have remained steady for the third day in a row on Wednesday. As a result of this change, the prices of two formerly surging commodities have significantly fallen. According to the finance minister, the Centre's plan will lower petrol prices by Rs. 9.5 per litre and diesel costs by Rs. 7 per litre in the coming weeks after taking into account its impact on other levies.
Fuel prices are revised daily by public sector OMCs such as Bharat Petroleum Corporation Ltd (BPCL), Indian Oil Corporation Ltd (IOCL), and Hindustan Petroleum Corporation Ltd (HPCL) in accordance with international benchmark pricing and foreign exchange rates. Every day at 6 a.m., any adjustments in gasoline and diesel prices take effect. Retail gasoline and diesel prices vary by state due to local taxes such as VAT and freight charges. Following the central government's decision to reduce excise duty, some state governments reduced the Value Added Tax (VAT) on gasoline and diesel.
The finance minister said, "We are also reducing the customs duty on raw materials and intermediaries for plastic products where our import dependence is high. Import duty on some raw materials of steel will be reduced. Export duty on some steel products will be levied.”
After tumultuous trading on Monday, the Crude oil prices settled on Tuesday as fears about low supply outweighed concerns about a possible recession and China's COVID-19 limitations. Brent crude gained 14 cents to $113.56 per barrel. The price of US West Texas Intermediate (WTI) crude slipped 52 cents to $109.77 per barrel. After Russia's invasion of Ukraine compounded supply fears, oil prices have soared this year, with Brent hitting $139 in March, the highest since 2008.