Jaitley Reserved On Slashing Excise Duty As Fuel Prices Soar To New High

Finance Minister Arun Jaitley today remained guarded on cutting excise duty to cushion the spiraling petrol and diesel prices which touched an all-time high, citing the volatility in international oil prices and its failure to show any linear movement.

“There is no straight line movement of global crude oil prices. They go up, they come down,” Jaitley said at his first media conference since taking over the finance ministry again. “In last two days, there has been some moderation. For six days before that, there was a gain.”

India, he said, is a net buyer of oil and is adversely impacted when rates go up “temporarily”. He termed such movement as “an external factor.”

When asked if the government need to be prepared if crude prices go up further, he said, that the policy formation was never a rigid process.

The rally in fuel prices has been driven by rupee dipping to an all-time low, making imports costlier, and rise in crude oil prices.

The rupee has fallen to a record low of Rs 71.76 to a dollar, depreciating by over Rs 3 in a month. Also, crude oil has gained $7 a barrel in a fortnight, driven by fears that the U.S. sanctions on Iran will likely contract supplies.

Petrol and diesel prices on Tuesday touched fresh highs. Rates in Delhi rose to Rs 79.31 a litre for petrol and Rs 71.34 for diesel, renewing calls for a cut in excise duty to cushion the spike. Almost half of the retail selling price of the two fuel is made up of central and state taxes.

Prices have been on fire since mid-August, rising almost every day due to a combination of a drop in rupee value and rise in crude oil rates.

A litre of petrol in Mumbai costs Rs 86.72, while diesel is priced at Rs 75.74 per litre. Prices in Delhi are the cheapest in all metros and most state capitals due to lower sales tax or VAT.