Excise duties on petrol, diesel zoomed up despite crude staying below $80

The government’s revenue generation through levy of excise duty saw a growth of 126 per cent between 2014-15 and 2021-22. The income growth was 186 per cent during the same period.

According to official data provided by the Petroleum Ministry’s Petroleum Planning and Analysis Cell (PPAC), excise duty on petrol was Rs 9.48 per litre and on diesel it was Rs 3.56 per litre in 2014-15 when the NDA government had come to power.

In 2021-22, excise duty on petrol rose 194 per cent to Rs 27.90 per litre and on diesel it rose 512 per cent to stand at Rs 21.80 per litre.

Interestingly between 2015-16 and 2021-22, while excise duties on petrol and diesel rose steadily, prices remained
consistently below $80 per barrel and even slid below the $50 per barrel mark on three occasions.

While crude oil was at $84.16 per barrel in 2014-15, it fell sharply to stand at $46 per barrel and $47 per barrel in 2015-16 and 2016-17 respectively.

A closer analysis of the data reveals that between 2015-16 and 2016-17 when crude oil prices were down by almost half of the 2014-15 levels, excise duty on petrol rose from Rs 17.48 per litre to Rs 21.48 per litre. During the same period, excise duty on diesel rose from Rs 10.26 to Rs 17.33 per litre.

Thus during 2015-17, excise duty on petrol and diesel rose by 22.9 per cent and 68.2 per cent respectively, when crude oil prices were in the range of $46-$47 per barrel.

Even in 2020-21, when crude oil prices fell sharply to $44.82 per barrel from $60.47 per barrel in 2019-20 due to the onset of the coronavirus pandemic, excise duty on petrol rose from Rs 19.98 per litre on March 13, 2020 to Rs 32.90 per litre on February 2, 2021. A rise of Rs 13 per litre in a span of less than a calendar year.

Similarly excise duty on diesel stood at Rs 15.83 per litre on March 13, 2020. However on February 2, 2021 it rose by Rs 16 to stand at Rs 31.80 per litre.

With the continuous rise in excise duty between 2014-15 and 2021-22 (barring a few cuts like the one effected in November 2021), there has been a steep rise of 186 per cent in the government’s earnings through levy of excise duty during the period under consideration.

In 2014-15, the total contribution to the exchequer was Rs 1,72,065 crore through this levy, which rose by 186 per cent to reach Rs 4,92,303 crore in 2021-22.

The government’s revenue growth through this levy during this period was also up by 126 per cent. In 2014-15, it earned a revenue of Rs 15,85,922 crore through excise duty on petrol and diesel, which went up to Rs 35,95,813 crore in 2021-22.


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