Petrol and diesel prices may be reduced after October 5, according to CLSA, which has based its report on speculation after comments by Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas, suggesting a cut last month.
The prices have not changed since March 2024. Jain had said that the state-run oil marketing companies (OMCs) may consider reducing petrol and diesel prices if international crude prices stay low for an extended period, as per media reports.
The CLSA in its note said, “Maharashtra is a crucial battleground, and the BJP-led alliance may consider lowering fuel prices as a populist move.”
According to several media reports, Maharashtra’s state elections are expected in early November. Final dates for the state election are likely announced by mid-October.
CLSA report suggests that along with any retail fuel price cut, the government may also raise excise duty on petrol and diesel. At present, the Centre levies an excise duty of Rs 19.8 and Rs 15.8 per litre on the sale of petrol and diesel.
Current excise duty is 40 per cent and 50 per cent lower compared to the 2021 peak.
According to CLSA, every rupee hike in excise duty on petrol and diesel would lead to an additional Rs 16,500 and Rs 5,600 crore collection annually in government accounts.
Excise duty is a tax levied on the manufacture or production of goods within the country. In the context of petrol and diesel, excise duty is a tax imposed by the Central government on the production or sale of these fuels within India.
Recently, crude oil prices saw a sharp decline in the International Market. On Wednesday, crude oil benchmark Brent Oil was 74.15 dollars per barrel and WTI was 71.16 dollars per barrel.
The report said the sharp decline in crude oil prices is positive for Indian oil marketing companies like Indian Oil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation. However, a potential rate cut and excise duty hike make these oil marketing companies vulnerable.
In the National capital Delhi, on Wednesday, petrol was priced at Rs 94.72 per litre and diesel at Rs 87.62.