The Center has earned around Rs 16 lakh crore by way of excise duty on petroleum products between FY 2015 and FY 21
in India, crude oil prices reached the highest level in almost three years. Subsequently, retail petrol and diesel prices, which were already higher due to the heavy tax rates, became higher in India. Notably, in recent times, whenever crude oil prices have risen, the burden has been passed on to Indian consumers. However, when crude oil prices fell, center excise The ratio was increased and consumers continued to pay more. In contrast, the state’s share in taxes has not increased much. The Center earned around ₹16 lakh crore through excise duty on petroleum products between FY15 and FY21. And now that fuel consumption is resuming to pre-pandemic levels, consumers may have to pay more.
double standards
The chart depicts crude oil price – Indian basket (left axis) and retail petrol price in Delhi (right axis). Since the end of 2014, crude oil prices have declined on several occasions. But this has rarely translated into a reduction in retail petrol prices. However, an increase in the price of crude is always accompanied by a parallel increase in the retail price.
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share of retail prices
A major reason for the jump in retail prices in the recent past is the Centre’s excise duty. While the share of states in the retail price has remained constant, the share of the Center has increased manifold since the end of 2014. Excise duty was revised sharply in 2020 when crude oil prices crashed due to a fall in demand due to the pandemic. Excise duty hikes continue into 2021, even as the price of crude oil continues to rise.
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increase in consumption
The chart shows India’s average crude imports (right axis) and average consumption of petrol and high speed diesel in India. While imports have recovered substantially from the low levels of the pandemic, they are yet to reach pre-pandemic levels due to local movement restrictions. At the same time, while the demand for petrol has improved, the consumption of high-speed diesel has not picked up.
full treasure
The chart shows the revenue earned by the Center and the states by way of excise duty and VAT on petrol and petroleum products respectively. The Centre’s revenue grew sharply in FY21 following the hike in excise duty. It collected ₹3.7 lakh crore in FY21. States’ collection stood at ₹2 lakh crore.
Source: PPAC
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