New Delhi: BJD MP Sasmit Patra Saturday said that the recent reduction in excise duty on petrol and diesel could result in a revenue loss of Rs 3-4 lakh crore for the Government of India, while also warning of broader economic challenges stemming from the ongoing West Asia conflict.
Speaking to media, Patra said, “The conflict in West Asia naturally has a global impact, including on India. The excise duty cut will cost the Government of India a loss of around Rs 3–4 lakh crore.”
He further noted that rising oil prices and supply disruptions could adversely affect economic growth.
“Due to the increase in oil prices, economic development may slow down. Delays in supply chains could lead to a decline in industrial production. Whether it is propane, PNG, or LPG, many industrial processes depend on these fuels. This situation could weaken our overall economic condition,” he added.
Expressing cautious optimism over diplomatic developments, Patra pointed to ongoing talks between Iran and the United States.
“Discussions have begun between Iran and the United States, with both sides putting forward their demands. In a way, we are moving towards mediation, and it would be best if a resolution comes soon,” he said.
He also mentioned recent developments in maritime movement through the Strait of Hormuz.
“Iran has allowed some ships, including those from India, to pass through the Strait of Hormuz. A few Indian vessels have already crossed, and more are expected. However, if the West Asia crisis is not resolved quickly, its impact will deepen further,” he added, urging for an early end to the conflict.
The government Friday slashed excise duties on petrol and diesel by Rs 10 per litre each, bringing them down to Rs 3 per litre for petrol and zero for diesel, in a move aimed at cushioning the impact of surging global oil prices.
The government has also provided exemptions on duties for fuel exports and supplies to foreign-going aircraft.
Separately, the Centre has rescinded an earlier 2022 notification and granted customs duty relief on imported aviation turbine fuel (ATF).
The reduction comes amid fears of a price hike due to the global energy crisis, triggered by the US-Israel conflict with Iran and the resultant blockade of the Strait of Hormuz.
Oil marketing companies (OMCs) are expected to absorb the reduction to offset mounting losses. OMCs are currently estimated to be incurring losses of around Rs 48.8 per litre on fuel sales, largely due to elevated global crude prices.
Meanwhile, global oil prices declined, with Brent crude futures falling 2.29 per cent to $105.53 per barrel. US WTI futures also dropped 2.54 per cent to $92.08 as of 8:50 am.