Consumers were benefitted first;excise duty came later: OilMin

Under attack for hiking excise duty on petrol and diesel, government today said the step was taken to save money for developmental works after "substantial" benefits of reducing global crude prices were passed on to consumers by effecting price cuts.
"The benefits of lower crude prices were first passed on to consumers...We had to raise excise duty to save some money for the national exchaquer to carry out development works," Petroleum Minister Dharmendra Pradhan said in Rajya Sabha.
Noting that the international crude prices came down to below USD 50/barrel recently from USD 111 per barrel during the Iraq crisis, Pradhan said consumers of the country have "substantially" gained as a result of the reduction in retail selling prices of petrol and diesel.

Petrol prices have come down from Rs 73.60 per litre in Delhi in July last year to stand at Rs 57.31 per litre now. At the same time, the reatil selling price of diesel fell to Rs 46.62 per litre now from Rs 58.97 a litre in August, 2014.
"While the price of petrol and diesel in Delhi has been reduced by Rs 16.29 per litre and Rs 12.35/litre respectively, the increase in excise duty on petrol and diesel is Rs 7.98 per litre and Rs 6.70 per litre only indicating that a major component of the benefit of reducing internatiobnal crude prices have been passed on to the consumers," he said.

Replying to a supplementary, he said one of the primary objectives behind the increase in excise duty was to fund the infrastructure development programme of the government, particularly for buidling roads.
"Allocation of these resources to road sector will also spur economic activity and employment generation arising out from the road construction," Pradhan said.
Replying to another question, he said the difference in the price of petrol in Maharashtra and Delhi was mainly due to the fact that the western state levies local body tax (LBT).