Petrol-Diesel Excise Duty Cut to Cost Government ₹1 Lakh Crore in Revenue
FM Sitharaman said cutting excise duty on petrol and diesel will reduce government revenue by about ₹1 lakh crore, easing fuel prices for consumers.
Finance Minister Nirmala Sitharaman said the recent cut in excise duty on petrol and diesel will reduce government revenue by about ₹1 lakh crore. Excise duty is a tax the central government levies on fuel, and a cut lowers pump prices for consumers but reduces the government's tax collection.
The Minister defended the move and pushed back against what she described as an overly pessimistic narrative about India's growth. The duty cut is intended to ease the burden of high fuel prices on households at a time of global energy-price pressure.
The revenue shortfall adds to the government's fiscal management challenge, which is partly cushioned by the record RBI dividend. Fuel taxes are a major source of central revenue, so changes to them have a direct effect on the fiscal deficit.
Key Points to Remember
- Excise duty cut on petrol/diesel → ₹1 lakh crore revenue loss
- Excise duty = central tax on fuel
- Aim: ease high fuel-price burden on households
- Fuel taxes are a major central revenue source
- Shortfall partly cushioned by record RBI dividend
Exam Relevance
Relevant for UPSC Prelims (Economy — Fiscal Policy, Taxation), SSC GA.
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