The government is currently not looking at lowering excise duty on petroleum products to contain rising retail prices, as it could negatively affect the fiscal deficit glide path, a top finance ministry official said.
“Fiscal considerations are far higher than one or two rupee price impact on consumers,” the official told Moneycontrol, adding that with every rupee cut of excise duty on fuel, the Centre will have to take a hit of Rs 13,000 crore annually.
The fiscal deficit target for 2018-19 is 3.3 percent of the GDP, and the government doesn't want to overshoot its borrowing target for the time being.
The government is comfortable with the current level of inflation and the impact of rising of fuel prices on inflation is not a matter of concern for the time being, the official said.
“We need to ensure that transport cost doesn't go up and transport's weightage on commodities is limited, so we are safe that way,” the official explained.
The excise duty cut, as and when it happens, will be a political call, the official said. The petroleum ministry has officially not asked for any cut in fuel excise duty.
Petrol price in Delhi has crossed Rs 74 per litre, while diesel rates hit a record high of Rs 65.65, the highest level in the last four years.
The Centre has raised excise duty nine times between November, 2014 and January, 2016 to garner revenues as global oil prices fell, but cut the tax only in October, 2017 by Rs 2 per litre, when petrol price hit Rs 70.88 per litre in Delhi.
The excise duty cut in October cost the government Rs 26,000 crore annually, said the official.
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