Published: Tue, March 24, 2020
Markets | By Otis Pena

Supermarket cuts fuel prices by up to 12p a litre

Supermarket cuts fuel prices by up to 12p a litre

But, most of it is going to be adjusted against the fall in rates that would have necessitated because of the slump in worldwide oil prices.

Latest Government figures show the average price for a litre of fuel at United Kingdom forecourts on March 16 was 120.3p for petrol and 124.4p for diesel.

Usually, an increase in excise duty leads to a rise in the prices of the two fuels. "Don't push people to the brink", he tweeted.

The government has made a decision to raise excise duty on petrol and diesel significantly, by upto ₹8 per litre, to mobilise additional resources that would be required to fight the Covid-19 pandemic.

In this context, Finance Minister Nirmala Sitharaman launched amendments to the Finance Bill 2020 within the Lok Sabha which included a proposal to extend the speed of particular excise obligation on these fuels to a future extent.

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First, the Lok Sabha passed the Finance Bill, 2020, without a discussion and then the Rajya Sabha returned it without a discussion, all in a matter of few hours.

It is not clear whether the entire Rs 8 per litre increase in special additional excise duty would be used as cap to raise duties upto that level or the government would notify the entire increase at one go.

The authorities had earlier introduced a hike of Rs three per liter in excise obligation on each fuels on 14 March.

Raising the cap on special additional excise duty will enable the government raise resources at a time when tax and non-tax revenues are falling. The government is increasing duties on petrol and diesel to raise revenues in view of the tight fiscal situation. An additional Re 1 per litre was also levied on both petrol and diesel under the road and infrastructure cess (RIC). These were last raised by ₹2 each on 14 March when, too, global oil prices declined sharply amid fears of a recession.

The slump in global crude oil prices, alongside the possibility of a global economic recession, has forced the government to look at avenues to raise revenues to support growth. "An increase in the special additional duty may not even compensate for the loss in revenue because of lower demand at this time". Interestingly, all the hikes are in the form of cesses which need not be shared with the State Governments. Sinha also pointed out that the government now needs to increase spending on policing and healthcare even while its revenues continue to fall.

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