Under all round attack on rising fuel prices, the government on Tuesday decided to slash the excise duty on petrol and diesel by Rs 2 per litre -- effective Wednesday -- to cushion the impact of rise in international crude prices, in a decision that will cost the exchequer Rs 13,000 crore during the remaining part of the fiscal.
In effect, the government decision could act as a check against retail prices going up in case global crude rates rise.
"The Government of India has decided to reduce the basic excise duty rate on petrol and diesel [both branded and unbranded] by Rs 2 per litre with effect from 4th October, 2017," a Finance Ministry statement here said.
"This decision has been taken by the government in order to cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on retail sale prices of petrol and diesel, as well as to protect the interest of common man," the statement said.
"The revenue loss on account of these reductions in excise duty is about Rs 26,000 crore in a full year, and about Rs 13,000 crore during the remaining part of the current financial year," it said.
Earlier, due to the increase in the international prices of petrol and diesel during the last few weeks, the retail selling prices of petrol and diesel in Delhi have risen to Rs 70.83 a litre and Rs 59.07 per litre, respectively, as on October 2.
This rise in the prices of petrol and diesel is also reflected in WPI inflation, which has increased to 3.24 per cent for the month of August 2017, as compared to 1.88 per cent for the month of July 2017, which prompted the government to act swiftly, it added.
Opposition parties have been critical of the government that petrol prices have been ruling high and it has not cut excise on fuels despite international prices rising recently.
When crude prices were falling dramatically over the last two years, the government, since 2015, hiked excise on petrol by Rs 12 a litre, and on diesel by over Rs 13, in instalments.
Last month, petrol prices in Mumbai, for instance, crossed levels it had touched before the Narendra Modi government took charge in 2014. In response to criticism on rising fuel prices, Petroleum Minister Dharmendra Pradhan clarified that the excise revenues served for spending on social development schemes.
He also ruled out any change in the present system of market-determined pricing.