Government today raised excise duty on petrol and diesel by Rs 1.50 a litre, but consumers will be spared of any price increase as oil firms would adjust it with a reduction in retail rates that was due this weekend.
The move will boost government revenue by about Rs 13,000 crore to contain budget deficit.
With a steep fall in international crude prices, oil marketing firms were expected to cut retail fuel prices by about Re 1 a litre with effect from November 16 after a fortnightly review.
Indian Oil Corp (IOC), the nation's largest fuel retailer, said the excise duty hike will not be passed on to consumers and will be adjusted against the reduction in rates that was due this weekend.
The fall in international oil prices had resulted in six consecutive reduction in petrol prices since August and two in diesel in the last one month.
Excise duty on normal or unbranded petrol was hiked from Rs 1.20 per litre to Rs 2.70 per litre and unbranded diesel from Rs 1.46 a litre to Rs 2.96, a government notification said.
The same on branded petrol was raised from Rs 2.35 a litre to Rs 3.85 a litre and on branded diesel from Rs 3.75 to Rs 5.25 per litre.
"For the moment, we are not passing on the increase in excise duty. It is being absorbed by companies and will be adjusted against review in rates which was due on Saturday," IOC Chairman B Ashok said.
Revision in rates will be considered at the next fortnight (end of November), he said. "As and when we look at price revision, whenever it is due, we will look at the situation and decide on revising rates then."
Before the duty hike, petrol's cost was Rs 64.25 a litre in Delhi and diesel's Rs 53.35 a litre. They will continue to be priced at the same rates.
"There is no increase in retail prices," he said.
