Excise Duty Cut On Petrol And Diesel Prices
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| Credit: The Indian Express |
THE NEWS
• On 21st May, The Centre announced a steep cut in the excise duty of fuel which will bring down the fuel prices, bringing a great relief to the common man!
• Petrol prices will be brought down by Rs.9.5 per liter and the diesel prices will be brought down by Rs.7 per liter
• The announcement was made by finance minister, Nirmala Sitharaman through her twitter handle
WHY WAS IT DONE?
• The Government responded to high inflation in the economy by announcing a series of steps to cool prices and cushion the impact on the public
• Retail inflation hit 7.8% in April, and the wholesale prices crossed 15% reflecting the input cost pressures
• Due to the Russian-Ukraine conflict and the Covid-19 pandemic, there is a global supply chain problem along with shortage of various goods, thus resulting in inflation
UNDERSTANDING IMPACT
"We project the May 2022 CPI inflation at between 6.5-7.0%. The fiscal cost, while material, can be absorbed by higher than budgeted revenues through other taxes" said ICRA Chief Economist Aditi Nayar
• Fuel prices tend to have a direct impact on retail goods, thus a reduction in excise duty is expected to tame the prices of essential commodities
• Experts have reviewed that this excise duty cut will help also cool the inflation trajectory
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