New Delhi: There is a glimmer of hope for Indian consumers and the fuel market as a whole, as CLSA suggests that petrol diesel prices may be reduced after October 5. The agency based its report on speculation after comments by Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas, suggesting a cut last month.
The prices have not changed since March 2024. According to media reports, Jain had said that the state-run oil marketing companies (OMCs) may consider reducing petrol and diesel prices if international crude prices stay low for an extended period.
The CLSA, in its note, suggests that Maharashtra is a crucial battleground, and the BJP-led alliance may consider lowering fuel prices as a populist move. This potential strategy could significantly influence the outcome of the upcoming state elections, making it a key point of interest for financial analysts and investors.
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According to several media reports, Maharashtra’s state elections are expected to take place in early November. The final dates for the state election will likely be announced by mid-October. The outcome of these elections could significantly influence the government’s decision on fuel prices, as the ruling party may use a reduction in fuel prices as a populist move to gain voter support.
CLSA report suggests that the government may also raise excise duty on petrol and diesel along with any retail fuel price cut. Currently, the Centre levies an excise duty of Rs 19.8 and Rs 15.8 per litre on the sale of petrol and diesel.
Current excise duty is 40 percent and 50 percent lower than the 2021 peak.
According to CLSA, every rupee hike in excise duty on petrol and diesel would lead to an additional Rs 16,500 and Rs 5,600 crore collection annually in government accounts. This means that if the government decides to increase the excise duty by one rupee, it could potentially earn an additional Rs 16,500 crore from petrol sales and Rs 5,600 crore from diesel sales each year.
Excise duty is a tax levied on manufacturing or producing goods within the country. In the context of petrol and diesel, excise duty is a tax the Central government imposes on the production or sale of these fuels within India. In simpler terms, it’s a tax that the government charges on the sale of petrol and diesel, which contributes to the overall price we pay at the pump.
Recently, crude oil prices saw a sharp decline in the International Market. On Wednesday, the benchmark Brent oil price was 74.15 dollars per barrel, and WTI was 71.16 dollars per barrel.
The report highlights that the recent sharp decline in crude oil prices, with the benchmark Brent oil price at 74.15 dollars per barrel and WTI at 71.16 dollars per barrel, could be a positive development for Indian oil marketing companies like Indian Oil, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation. This news could potentially boost investor confidence in these companies, despite the potential challenges of a rate cut and excise duty hike.
On Wednesday, petrol was Rs 94.72 per litre and diesel Rs 87.62 in the national capital, Delhi.
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–IANS
