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Excise Duty Cut May Cost India Rs 3-4 Lakh Crore in Revenue, Warns BJD MP

BJD MP Sasmit Patra has warned that the recent excise duty reduction on petrol and diesel could lead to a massive revenue loss of Rs 3-4 lakh crore for the government. He linked this fiscal impact to broader economic challenges stemming from the West Asia conflict, which risks disrupting fuel supplies and slowing industrial production. The government's duty cuts and exemptions aim to cushion consumers from soaring global oil prices, while oil marketing companies absorb significant losses. Patra expressed hope for diplomatic talks between Iran and the US to resolve the crisis and ease pressure on global energy markets.

Key Points: Excise Duty Cut Revenue Loss | India Fuel Price Impact

  • Govt slashes excise duty on petrol & diesel
  • Revenue loss estimated at Rs 3-4 lakh crore
  • West Asia conflict threatens supply chains & growth
  • Oil prices volatile amid global energy crisis
  • OMCs absorbing heavy losses on fuel sales
3 min read

Excise duty cut may cost govt revenue loss of Rs 3-4 Lakh crore: BJD MP Sasmit Patra

BJD MP warns excise duty cut on fuel could cost govt Rs 3-4 lakh crore, amid economic risks from West Asia conflict and oil price surge.

"The excise duty cut will cost the Government of India a loss of around Rs 3-4 lakh crore. - Sasmit Patra"

New Delhi, March 28

BJD MP Sasmit Patra on Saturday said that the recent reduction in excise duty on petrol and diesel could result in a revenue loss of Rs 3-4 lakh crore for the Government of India, while also warning of broader economic challenges stemming from the ongoing West Asia conflict.

Speaking to IANS, Patra said, "The conflict in West Asia naturally has a global impact, including on India. The excise duty cut will cost the Government of India a loss of around Rs 3-4 lakh crore."

He further noted that rising oil prices and supply disruptions could adversely affect economic growth.

"Due to the increase in oil prices, economic development may slow down. Delays in supply chains could lead to a decline in industrial production. Whether it is propane, PNG, or LPG, many industrial processes depend on these fuels. This situation could weaken our overall economic condition," he added.

Expressing cautious optimism over diplomatic developments, Patra pointed to ongoing talks between Iran and the United States.

"Discussions have begun between Iran and the United States, with both sides putting forward their demands. In a way, we are moving towards mediation, and it would be best if a resolution comes soon," he said.

He also mentioned recent developments in maritime movement through the Strait of Hormuz.

"Iran has allowed some ships, including those from India, to pass through the Strait of Hormuz. A few Indian vessels have already crossed, and more are expected. However, if the West Asia crisis is not resolved quickly, its impact will deepen further," he added, urging for an early end to the conflict.

The government on Friday slashed excise duties on petrol and diesel by Rs 10 per litre each, bringing them down to Rs 3 per litre for petrol and zero for diesel, in a move aimed at cushioning the impact of surging global oil prices.

The government has also provided exemptions on duties for fuel exports and supplies to foreign-going aircraft.

Separately, the Centre has rescinded an earlier 2022 notification and granted customs duty relief on imported aviation turbine fuel (ATF).

The reduction comes amid fears of a price hike due to the global energy crisis, triggered by the US-Israel conflict with Iran and the resultant blockade of the Strait of Hormuz.

Oil marketing companies (OMCs) are expected to absorb the reduction to offset mounting losses. OMCs are currently estimated to be incurring losses of around Rs 48.8 per litre on fuel sales, largely due to elevated global crude prices.

Meanwhile, global oil prices declined, with Brent crude futures falling 2.29 per cent to $105.53 per barrel. US WTI futures also dropped 2.54 per cent to $92.08 as of 8:50 am.

- IANS

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Reader Comments

S
Shreya B
The MP is right to highlight the broader economic risks. It's not just about the duty cut. If the West Asia conflict disrupts supplies, our entire manufacturing sector could suffer. Hope diplomacy works and the Strait of Hormuz remains open for our ships. 🇮🇳
A
Aman W
Rs 3-4 lakh crore is a staggering number. While the relief is welcome, the government must now explain how it plans to cover this gap. Will it lead to cuts in welfare schemes or higher taxes elsewhere? Transparency is needed.
P
Priyanka N
The OMCs are already suffering huge losses. The government is asking them to absorb the cut now, but how long can they do that? Eventually, the burden might come back to us if they raise prices later. It's a short-term fix.
D
David E
Interesting analysis. The global oil price drop mentioned at the end is a positive sign, but the geopolitical risk from West Asia is the real wild card. India's energy security is too dependent on that volatile region. Time to fast-track renewable alternatives.
K
Kavya N
Finally some relief! My auto-rickshaw driving husband can breathe a little easier this week. The revenue loss is the government's headache to manage. For millions of daily wage earners, every rupee saved on fuel counts. 🙏

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