India increases fuel taxes in a bid to shore up revenue

Published March 14, 2020
The excise duties on the fuel have been hiked by 3 rupees per litre. — AFP/File
The excise duties on the fuel have been hiked by 3 rupees per litre. — AFP/File

India on Saturday increased taxes on petrol and diesel in a desperate attempt to increase government revenue at a time when tax collections have fallen amid the weakest economic growth in six years.

The excise duties on the fuels, which have been hiked by 3 rupees per litre, is expected to result in up to 400 billion Indian rupees ($5.42 billion) increase in revenue, a senior government official told Reuters.

Taxes on petrol and diesel, which account for more than a third of retail fuel prices, are one of the biggest sources of income for Prime Minister Narendra Modi’s government, which has more than tripled revenue from taxes on fuel since first coming to power in 2014.

India stopped controlling petrol prices in 2010 and diesel prices in 2014, linking them to global crude markets in a bid to ease pressure on government finances and improve the earnings of oil refiners.

Global oil prices posted their biggest week of losses since the 2008 global financial crisis, rocked by the coronavirus outbreak and efforts by top exporter Saudi Arabia and its allies to flood the market with record levels of supply.

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