Govt cuts fuel excise duty to shield consumers from high oil prices

FM Nirmala Sitharaman announced excise duty cuts on petrol and diesel to shield consumers from rising global crude oil prices. The decision, led by PM Modi, aims to support OMCs and ensure stable fuel supplies without burdening the public.

Union Finance Minister Nirmala Sitharaman on Friday welcomed the cuts in excise duty of Petrol and Diesel as announced by the government. The Finance Minister said the main aim of such a move was to insulate consumers from the rising price of Crude Oil due to the ongoing West Asia conflict.

Govt to Support OMCs to Keep Fuel Prices Stable

"First of all, whenever such a crisis comes in the world and its impact falls on India, before this whether it was COVID or now, the way the Honourable Prime Minister immediately responds to it is so that the burden doesn't fall on the public and the public doesn't face any difficulty or shortage of petrol, diesel, and LPG. For this reason, now, because prices are rising in the international market of crude oil, and because of that, petrol, diesel, and ATF (Aviation Turbine Fuel), the Honourable Prime Minister wanted the consumer price not to increase. For that reason, we have decided to support Oil Marketing Companies (OMCs) so that the government will help them with the things they are buying at higher prices, but the rate should not be increased for the public," she said.

"Yesterday, on the day of Ram Navami, the Honourable Prime Minister called an emergency meeting and held a discussion on these topics and immediately took a decision. And whatever work had to be done, our ministry and the Petroleum Ministry sat together last night and did the work, and today we are announcing this decision," she added.

Protecting OMCs, Ensuring Fuel Supply

The Finance Minister said another aim of the excise cuts was to protect the Oil Marketing companies which were facing issues because of the cost of crude oil shooting up. This she said would also ensure there is no shortage in fuel supplies.

"Prices are increasing abroad, because of which oil marketing companies might stop buying--such a situation should not occur. They should continue to buy, bring it in, and make arrangements to ensure our public gets the right quantity at the right time. That's why, due to this decision today, there will be no shortage in supply, no shortage in availability, and the public will get diesel, petrol, and crude," the FM said.

Securing ATF for Domestic Sector

The FM said that the excise rate on Aviation Turbine Fuel export had been raised to ensure that the fuel is prioritized for use in the domestic sector. "ATF is very important. It is necessary for India's aircraft and our companies to get ATF. For that reason, there are many refineries in India that buy goods from abroad, refine them here, and also export them abroad and give them to us. But we have now increased the rate on that export, increased the excise duty, so that instead of exporting, they will sell it in India itself, which will ensure plenty of availability in India and people won't feel a shortage," she said.

Details of Duty Cut and Global Context

The government on Friday slashed excise duties for petrol and diesel bringing them down to Rs 3 per litre of petrol and zero for a litre of diesel. Windfall tax on export of diesel has been set at 21.5 rupees/litre.

The reduction comes amid a global energy crisis due to the US-Israel war on Iran and the consequent Tehran-imposed blockade on the Strait of Hormuz, through which a fifth of the world's crude oil and gas supply, between 20 and 25 million barrels per day, is shipped. Before the conflict, India bought 12 to 15 per cent of that oil. (ANI)

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