New Delhi: The new budget has proposed an excise duty cut on auto fuels, but this is not going to translate into good news for the common man, for this excise cut will not mean that petrol and diesel prices will go down.
The Finance Minister has reduced the excise duty on petrol and diesel from eight per cent to six per cent.
"The February 16 reduction in prices of petrol by Rs 2 a litre and diesel by Re 1 per litre was done on the premise that Government will share part of the cut by way of duty cut. As Budget was around the corner, no duty adjustment was done then. On Wednesday, while presenting the Budget the Finance Minister kept that promise," Petroleum Secretary M S Srinivasan was quoted as saying by news agency PTI.
"The excise duty cuts would have translated into a Rs 0.47-0.48 cut in a litre each of petrol and diesel prices, but since the February 16 reduction was done despite oil companies losing Rs 1.35 a litre on diesel, the cut is not being passed on to the consumers," Srinivasan was further quoted as saying.
After the price cut, under-realisation on diesel widened to Rs 2.35 a litre. On Petrol, the companies were making Rs 2 a litre profit which was wiped out by the price cut.
Indian Oil Corp (IOC) director (finance) P V Narasimhan said the excise duty cut would result in the company's under-reliasation on the two fuels coming down by Rs 1,250 crore.
For the industry, the excise duty cut would mean about Rs 2,500 crore less in losses on fuel sales.
(With inputs from PTI)
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