No Relief on Petrol and Diesel Taxes: Oil Minister


Oil Minister Dharmendra Pradhan on Wednesday ruled out any cut in excise duty, for now, to give relief to consumers from the spiralling retail prices of petrol and diesel which have touched all-time highs.

“There is no such proposal at present,” he said in the Rajya Sabha when asked if the government was looking at cutting taxes to cool off prices.

Petrol price crossed the Rs 94-mark in Mumbai and diesel soared to Rs 84.63 per litre on Wednesday. Retail pump rates have not seen a reduction in almost 11 months.

International benchmark rates had plunged to decade lows in April. The government had hiked excise duty on petrol by a record Rs 13 per litre and on diesel by Rs 16 a litre to mop up gains arising from the fall in rates but did not cut taxes when oil prices bounced back.


Replying to questions on rising fuel prices, Pradhan said retail pump rates are governed by international prices as India is 85 percent dependent on imports for meeting its need.

“When the international price of crude oil is higher, we have to increase the prices and when the international price is lower, we have to decrease the prices here too. This is a market mechanism that is followed by oil marketing companies. We have given the freedom to them,” he said during Question Hour.

Both central and state governments rely heavily on collections from taxes on these products for meeting their developmental and welfare priorities, he said.

“They need some resources… (and) this (taxing petrol and diesel) has been a proven and substantial route by all the governments, whether the state governments or the central government,” he said.

Price of Petrol and Diesel in recent weeks

The retail price, he said, is made up of three components — the base price that reflects the cost of international oil, central excise duty, and state taxes.


Retail petrol prices have risen by Rs 18.01 per litre since mid-March 2020 and diesel rates have gone up by Rs 15.44.

The current rally in fuel prices is because crude oil prices have touched the USD 61 per barrel mark for the first time in more than a year.

Taxes make up for over 61 percent of the retail petrol price while they constitute more than 56 percent of diesel pump rates.

While the central government has raised excise duty, states too have raised VAT, the minister said. “So, both the states and the central government are raising taxes according to their developmental needs.”

In the last 300 days, petrol and diesel prices have risen on 60 days. Rates were cut on 7 days for petrol and 21 in the case of diesel. “For almost 250 days, we have neither increased nor decreased the price,” he said. “So, it is a misnomer to campaign that prices are an all-time high.”


Harshit Bhasin
I’m a student currently doing B.A(hons) English from Dyal Singh College, Delhi University. I like to read and write and apart from it, I like watching movies, series, animated series (Animes) and playing games. I’m also a sportsperson and I like to perform outside activities regularly.

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