Petrol, diesel excise duty hike will not pinch public, say officials

The excise duty on petrol and diesel has been hiked by Rs 1.50 a litre but the increase will not be passed on to consumers as public sector oil companies have been asked to shoulder the burden, a senior petroleum ministry official said on Thursday.

The hike, which was notified on Wednesday evening, will boost government revenue by about Rs 13,000 crore on an annual basis.

On their part, the oil companies expect to offset the increase as prices are declining in the international market and they are making an extra Re 1 per litre which they would have otherwise passed on to the consumer in the fortnightly revision.

The government has taken the step as fiscal deficit has spun out of control due to low tax collections. Excise collections, which indicate the level of economic activity, declined by 1.2 per cent during April-October to Rs 88,330 crore.

Indian Oil Corporation (IOC), the nation's largest fuel retailer, said that the excise duty hike will not be passed on to consumers and adjusted against reduction in rates likely by this weekend. The fall in international oil prices had resulted in six consecutive reduction in petrol prices since August and two in diesel in the last one month.

Total excise duty on unbranded petrol will rise from Rs 9.20 to Rs 10.70 per litre and on unbranded diesel from Rs 3.46 to Rs 4.96 per litre. Branded petrol attracts excise duty of Rs 10.35 per litre, which would go up to Rs 11.85 per litre, and that on branded diesel from Rs 5.75 to Rs 7.25 per litre. IOC chairman B Ashok said, "Revision in prices will be considered in the next fortnight (November-end).