India Reassessing Excise Duty on Petrol, Diesel Amid Russia-Ukraine War; PM to Meet FM Today

Prime Minister Narendra Modi is more likely to meet finance minister Nirmala Sitharaman on Thursday night to debate the financial affect of the continued Russia-Ukraine battle. Following the blistering announcement of Russian President Vladimir Putin to begin navy operations in Ukraine border on Thursday morning, the Brent crude oil value hit $100-mark after nearly eight years.

The escalating stress between Russia and Ukraine will push the oil costs additional, believed knowledgeable. The Prime Minister’s Office, finance ministry and oil ministry had an in depth dialogue on steep leap in world oil costs, in response to CNBC-TV18 sources. PMO has requested the finance ministry to reassess the present excise responsibility ranges in India. The finance ministry is analyzing how a lot excise responsibility hit may be absorbed by the federal government amid this geo-political disaster, the sources added.

It should be talked about that petrol and diesel costs touched all-time excessive in India final 12 months. To present some aid to widespread males, the central authorities introduced to scale back excise responsibility on petrol and diesel by Rs 5 and Rs 10, respectively on November 3. Several states adopted the footsteps of the federal government and diminished the VAT on gas costs. Petrol and diesel costs have remained identical in India since then.

Now with Brent crude oil value hitting $105 on Thursday, India is more likely to improve the petrol and diesel costs quickly. The state-run oil advertising and marketing corporations are absorbing Rs 10 per liter loss on petrol and diesel daily. Oil ministry knowledgeable the finance ministry and Prime Minister’s Office in regards to the present situation, the sources talked about.

The central authorities has not taken any choice on lowering excise responsibility but. The choice might be taken on the highest political stage, the sources added.

Finance minister Nirmala Sitharaman earlier acknowledged that the rising crude oil costs pose a menace to India’s monetary stability. “It is difficult to say how it will go. Even today, in the FSDC, when we were looking at the challenges which are posed for the financial stability, crude was one of the things,” Sitharaman said after Financial Stability and Development Council (FSDC) meeting earlier this week.

Russia-Ukraine War: Crude Oil Hits $105 per Barrel, How it Will Impact India

India does not depend heavily on Russia for its crude import. So there will be a negligible impact of supply-chain disruptions. However, Russia is the second largest oil producer in the world. Given its dominance in the global crude oil supply a suspension in production activities by Russia will impact global prices of crude with an impact also applicable to India.

“It could impact India’s trade deficit, weaken the Rupee and impact the fiscal deficit unless the entire rise in the crude oil prices is passed over to the customers,” stated Deepak Jasani, head of retail analysis, HDFC Securities.

“Oil inching higher is not a good sign for the Indian economy as it forms a big part of our import bill. The government has not passed on the impact of the recent rise in oil prices however we believe sooner or later it would pass on which would lead to inflation. Moreover, high import bills would also put pressure on currency and India’s fiscal balance,” said Ajit Mishra, VP-research, Religare Broking Ltd.

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