The central government has hiked the excise duty by Rs 10 per litre on petrol and Rs 13 per litre on diesel.
This is largely to mop-up revenue at a time when economic activity has slumped completely. The government in the past has been doing the same, especially when international prices of crude oil are low.
However, it is likely that oil marketing companies like Indian Oil, BPCL and HPCL will not hike retail petrol prices, given that crude oil prices had fallen and they had not reduced rates. So, it is likely that these companies would absorb the hike in rates.
This is the second time since March that the government has hiked excise duty to mop up gains arising from fall in international oil prices. It had raised excise duty on petrol and diesel by Rs 3 per litre each in March to garner about Rs 39,000 crore.