Fuel Price Hike From Next Week; Centre May Reduce Tax By A Margin

The government, considering the larger interest of consumers and OMCs may reduce taxes on fuel by a margin. As per reports, OMCs which till now absorbed the cost will begin to hike fuel rates next week. Fuel rates in the country have remained constant for the longest run in the run up to elections in the country.
Now with the international crude prices gaining amid geo-political tensions, the prospect of Indian basket of crude averaging more than $100 per barrel for a long period looms large.

The under recoveries on auto fuels have surged to levels of Rs. 10-12 per litre within the fortnight. Also, there could be a case that the centre may nudge states to reduce VAT auto fuels. On November 4, 2021 last year, the government cut taxes on petrol and diesel by Rs. 5 and Rs. 10 per litre, respectively.
From the time the prices have been held constant, Indian basket of crude has surged in price from $83 per barrel to $121 per barrel.

Notably given the government's not so aggressive revenue estimates, it has room to bring about tax cuts.

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