The government's recent hiking of excise duty on petrol and diesel will fetch it an additional Rs.10,500 crore in the current fiscal, Finance Minister Arun Jaitley said Tuesday.Jaitley said in a written reply in the Rajya Sabha that excise duty hikes imposed in November and December will respectively get the exchequer Rs.6,000 crore and Rs.4,500 crore in the remaining months of the current fiscal ending March 31 next year. To make up for fall in taxes due to the sustained decline in international crude oil prices, the government hiked excise duty by Rs 1.50 a litre on both the fuels first on Nov 12. Later, on December 2, the duty on petrol was hiked by Rs.2.25 per litre and on diesel by Re.1 a litre.Petroleum Minister Dharmendra Pradhan last week defended the hike in parliament saying the money would fund welfare schemes and not be misappropriated as happened under the previous UPA government.
Consumers, however, will be spared the burden of the excise hike and there will be no change in retail prices.An official source in the finance ministry explained the economics behind hiking the excise duty, a major portion of which goes to the states, particularly in the wake of a fall in the global crude oil prices to a five-year low.The official said since the over-recovery, or profit, that state-run oil marketing companies have now been making on these fuels had gone up, the government has taken a credit of a portion of the same.As a consequence, he added, consumers will feel no impact of the hike. Instead, it will boost the government's indirect tax collections in a situation of economic slowdown and help it contain the fiscal deficit.