While providing Rs 2 per litre excise cut in fuel products, Jaitley also slapped a new Rs 8 per litre "Road and Infrastructure Cess" on motor spirit. While Petrol prices in Delhi, Kolkata, Mumbai and Chennai on Thursday were at Rs 73.05, Rs 75.74, Rs 80.91 and Rs 75.11 respectively.
"Finance Minister Arun Jaitley's populist measure of reducing basic excise duty on fuel comes at a time when petrol prices have hit Rs 80 across major cities in India".
The Modi government also abolished additional excise duty on fuel by Rs 6.
Dharmendra Pradhan, Minister of Petroleum of Natural Gas, on June 16, 2017, said, "With this historic step towards transparency and customer interest, the Indian Oil & Gas industry has joined the elite league of countries like US and Australia wherein fuel prices are revised on a daily basis".
"There is a glimmer of hope that some of the heat in the forecourt price of fuel could cool in February as our current two-week forecast shows reductions of a penny for petrol and two pence for diesel".
Interestingly, the rate of brent crude oil was around $128 per barrel in September 2013, when the petrol prices in Mumbai had skyrocketed to as high as Rs 83.62. But petrol and diesel will not be cheap.
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The high costs are due to the rising price of oil which recently increased by 2%, although this has been offset to some extent by the recent boost to the pound.
"Both petrol and diesel are now at their highest points for more than three years which is bound to be making a dent in household budgets".
According to TaxGuru data, total excise duty on motor spirit remains unchanged.
Once brought under GST, prices of petrol and diesel are likely to stabilise and may remain within the Rs 50-mark since it will do away with the excise duty imposed by the Centre and the Value Added Tax (VAT) levied by the states. "If prices rise, that would hurt demand growth, which would be credit negative for the oil-marketing companies".
Union Finance Secretary Hasmukh Adia told a post-Budget media briefing that the changes won't affect the customer. "This proves our stand that the BJP has always been in favour of capitalists", Siddaramaiah, who also holds the finance portfolio, said.