Petrol rate cut by Rs 9.50 per litre, diesel by Rs 7

Credit: DH illustration

With skyrocketing prices punching a hole in the household budget, the Centre on Saturday took a slew of measures, including cutting excise duty on petrol and diesel, relief of Rs 200 on each cooking gas cylinder to the poor and reduction in import duty on certain raw materials for iron, steel and plastics, which were making finished products costlier in India.

While the excise duty on petrol was cut by Rs 8 per litre, on diesel, it was reduced by Rs 6 per litre. The move will make pump prices of petrol lower by Rs 9.50 per litre and diesel by Rs 7 a litre, said Finance Minister Nirmala Sitharaman, who announced the measures to fight price rise, on Twitter.

In the past two months, however, petrol prices have been hiked by Rs 10 per litre.

She, however, asked states, especially those who have not cut local taxes on petrol and diesel till now, to move ahead with reduction in VAT and help cool pump prices.

The Centre will also give a subsidy of Rs 200 per cooking gas cylinder for 12 refills a year. This will help over nine crore beneficiaries of Pradhan Mantri Ujjwala Yojana.

The finance minister said that while the excise duty cut will cost the exchequer Rs 1 lakh crore a year, the subsidy on cooking gas will have a revenue implication of around Rs 6,100 crore a year.

The Centre also reduced import duty on raw materials and intermediaries for iron, steel and plastic products, where India's import dependence is high, said Sitharaman.

She said measures are also being taken to improve the availability of cement and reduce its cost.

Experts said even after cutting excise duty, the Centre's tax revenues will surpass the budget estimate by Rs 1.3 lakh crore this year due to robust tax collection.

"The move will help cool the inflation trajectory going ahead, and complement the monetary policy. We project the May 2022 CPI inflation to be between 6.5% and 7%," said Aditi Nayar, chief economist at ICRA.