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Despite Excise Duty Cut On Fuel Prices, Indian Crude Oil Basket Remains High In May

By Mahesh Limbani May 22, 2022

Despite Excise Duty Cut On Fuel Prices, Indian Crude Oil Basket Remains High In May

Despite cut in excise duty on fuel prices, India’s crude oil basket price remains high

Even as the Government on May 21 announced a cut in excise duty on petrol and diesel – a move aimed at fighting spiralling inflation and which came amid bitter confrontation between Centre and states over levy of taxes on fuel rates – the Petroleum Ministry’s Petroleum Planning and Analysis Cell’s (PPAC) latest report shows that crude oil (Indian basket) remained high at $107.15 per barrel as on May 19.

As per PPAC, the crude oil Indian basket’s price of $107.15 per barrel was at a rupee/dollar exchange rate of Rs 77.70

According to another report of PPAC which released on May 20, 2022, showed that the average price of crude oil (Indian basket) in May so far (till May 19) has remained high at $107.26 per barrel.

In April, 2022 the Indian basket crude oil was priced at $102.97 per barrel. 

Meanwhile after a gap of 45 days, fuel prices came down on Sunday May 22, 2022 after Finance Minister Nirmala Sitharaman announced a cut in excise duty on petrol by 8 per litre and 6 rupees per litre on diesel on Saturday (May 21) evening.

This cut led to a reduction of Rs 9.5 a litre on petrol in Delhi and Rs 7 a litre in diesel after taking into account its impact on other levies.

Petrol prices in Delhi today came down to Rs 96.72 a litre as against Rs 105.41 a litre earlier. Diesel in the national capital now costs Rs 89.62 a litre as against the earlier prices of Rs 96.67 per litre.

Incidentally, the retail price of petrol in Delhi at Rs.96.72 per litre today is the lowest since March 22, 2022.

Petrol prices in Delhi have fallen below the Rs 100 per litre mark for the first time since March 28, 2022.

After announcing the excise duty cut on fuel prices on the evening of May 21, Finance Minister Nirmala Sitharaman had exhorted all state governments, especially the ones which had not reduced excise duty on November 4, 2021, to also implement a similar cut and give relief to the common man.

The Finance Minister’s request to states to cut down value added tax (VAT) on fuel came just weeks after Mr Modi’s similar exhortation to non-BJP ruled states to reduce VAT on fuel prices, that had led to a bitter confrontation between them and the Centre.

The non-Congress states had retaliated to the Prime Minister’s request by alleging that rather, it was the Union Government which was fleecing citizens by levying a variety of taxes and cesses.

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