Higher consumption of petrol and diesel can help govt cut fuel cess: ICRA

Petrol Diesel Prices in India: Higher consumption of petrol and diesel can help the government cut cesses on the fuels by Rs 4.5 per litre without impacting the revenue collections of FY21, domestic rating agency ICRA stated. It can also help reduce the pressure on inflation, ICRA said. The petrol consumption is estimated to increase by 14 percent in 2021-22 while diesel by 10 percent on the lower base, mobility and economic recovery, ICRA said. Also Read | Moody’s slashes India growth forecast for 2021 to 9.6 percent It further said that it will result in an additional Rs 40,000 crore in revenue for the government through higher collections of the cess. Also Read | Kangana Ranaut sparks new row, urges India’s name to be changed to ‘Bharat’ It further said that if the government opts to forego this additional cess collection of Rs 40,000 crore, it may reduce the cesses by Rs 4.5 per litre. Also, it would help contain the inflation situation which has breached the Reserve Bank of India's (RBI) target band in May. The petrol prices in India have already breached over Rs 100 per litre in many places while diesel is also closing in on the three-digit mark. It has led to a wide clamour for reducing the cesses imposed on the fuels. It may be recalled that the cess was introduced in early 2020 in an order to generate additional revenue at a time when there was a steep fall in global crude prices. While crude prices firmed up, the government maintained the cess, leading to a higher impact on the consumer's finances. -PTC News