The Centre has reportedly no plans to cut excise duty on fuel products right now due to fiscal concerns, and the government may resort to additional expenditure for FY22.
The Centre's plan to not slash excise duty comes amid mounting expenses to support an economic revival and strengthen healthcare infrastructure in the wake of the second Covid-19 wave.
A Rs 10 cut in fuel excise duty will affect fiscal deficit by 0.58 per cent, and lower inflation only by 0.2 per cent, CNBC-TV18 reported, citing sources to confirm the Centre has no plans to cut excise duty on fuel.
In a written reply to a question in the Rajya Sabha on Tuesday, the government said the excise duty on petrol and diesel has been calibrated to generate resources for infrastructure building and other developmental expenditure, keeping in view the prevailing fiscal situation.
"The government is making concerted efforts to raise resources for infrastructure and other developmental items of expenditure, the details of which were announced in the annual Budget. The excise duty rates on petrol and diesel have been calibrated to generate these resources keeping in view the prevailing fiscal situation. VAT on petrol and diesel are levied by states," minister of state for finance Pankaj Chaudhary said.
"The OMCs have increased and decreased the prices of petrol and diesel according to changes in international prices and rupee dollar exchange rate," he added.
In the first three months (April-June) of the current fiscal, the total excise duty collected on petrol and diesel was Rs 94,181 crore.
(Edited by Rupashree Ravi)
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