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Govt may hike excise on liquor if it softens petrol, diesel prices

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MUMBAI: A hike in the excise duty on Indian-made foreign liquor is on the cards to tackle the burden on the state exchequer if chief minister Devendra Fadnavis decides to slash the prices of petroleum products. The chief minister is expected to take a decision in the days to come.

“It will be a political call,” a bureaucrat said. “Fadnavis will have to decide on slashing the prices of petroleum products in view of discontent among the people over spiralling prices of petroleum products. We are ready with all the calculations on mobilisation of funds following a hike in excise duty and additional funds required to tackle the financial situation arising out of reduction in prices of petrol and diesel.”

The bureaucrat said that if additional excise duty of 10% is imposed on Indian-made foreign liquor, then it will generate Rs 800 crore more per year. If the surcharge on petrol is cut by Re 1, it will mean a loss of Rs 500 crore, while if surcharge on diesel is reduced by Re 1, it will result in a loss of Rs 1,000 crore per year.

Petrol crossed the Rs 91 mark on Monday, retailing for Rs 91.08 per litre after a 24 paise increase. Diesel rose 32 paise, taking it to Rs 79.72 per litre. The price rise in transportation fuel in response to a heated global crude market has given rise to sharp feelings in the public, especially as a major chunk of the final price is made up of a slew of taxes.

“It is a piquant situation before the CM. On the one hand, discontent is brewing owing to massive increase in the prices of petroleum poducts, on the other hand if surcharge is reduced it will result in a burden of Rs 1,500 crore on the state exchequer,” the bureaucrat said. “Secondly, Rs 800 crore will be mobilised if excise duty on IMFL is hiked by 10%.”

The bureaucrat said that a proposal to hike excise duty on IMFL was pending before the government since 2013.

“After 2013, we have not reviewed excise duty on IMFL,” the bureaucrat said. “Under the existing situation, particularly when the Lok Sabha election is round the corner, chief minister Fadnavis has no option but to at least marginally reduce the prices of petrol and enhance excise duty on IMFL to balance the financial situation.”

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