New Delhi: A day after Finance Minister Nirmala Sitharaman in her Union Budget speech proposed to increase excise duty and road cess by Rs 1 per litre on fuels, Petrol and Diesel prices have hiked across the country on Saturday.
Petrol prices surged by Rs 2.45 a litre while diesel will now cost Rs 2.36 more per litre. After the hike, petrol in Delhi will now cost Rs 72.96 per litre and diesel will cost Rs 66.69 per litre. While petrol price in Delhi is cheaper, in Mumbai, it is being sold for Rs 78.57 per litre and Kolkata is charging its residents Rs 75.15 for a litre of petrol.
This hike in cess and excise duty on petrol and diesel will result in additional revenue for the government which is looking to contain its fiscal deficit to 3.3 percent of the Gross Domestic Product (GDP) for this year.
While announcing additional cess and excise duty on petrol and diesel, Sitharaman said, “Crude prices have softened from their highs. This gives me room to review excise duty and cess on petrol and diesel. I propose to increase special additional excise duty and road and infrastructure cess each one by 1 rupee a litre on petrol and diesel.”
While the prices have already surged, Sitharaman dismissed the suggestion that this will lead to higher inflation. She added that the surge aims to meet public funding demands without hurting the individual taxpayers.
Tax collection on petrol and diesel is one of the biggest source of revenue for the government and it accounts for more than a third of the retail fuel prices. The move comes as a surprise as government has increased taxes on fuels even when global crude prices are falling.