The Centre on January 2 hiked excise duty on petrol by ₹0.37 per litre and by ₹2 a litre on diesel, the second increase in duties in just over two weeks, to mop up a little less than ₹4,400 crore.
However, there will be no increase in retail selling price of petrol and diesel as state-owned oil firms had not passed on the full benefit of a reduction in international oil prices to consumers on January 1.
Basic excise duty on unbranded or normal petrol has been increased from ₹7.36 per litre to ₹7.73 and the same on unbranded diesel from ₹5.83 to ₹7.83 per litre, a notification of the Central Board of Excise and Customs (CBEC) said.
The increase in excise duty will fetch the government over ₹4,300 crore on diesel and about ₹80 crore on petrol.
This is the second time in less than three weeks that excise duty is being hiked to make use of the slump in oil prices to garner resources for the central government without burdening consumers.
The Centre had from December 17 raised excise duty on petrol by ₹0.30 per litre and ₹1.17 a litre on diesel to garner ₹2,500 crore.
Taken together with the November 7, 2015 increase in excise duty on petrol of ₹1.60 per litre and diesel by 30 paise to raise ₹3,200 crore, this is the third hike in levies this fiscal.
In the three increases, the Centre is expected to mop up over ₹10,000 crore to meet its budgetary deficit.
Prior to these, the Centre had in four instalments raised excise duty on petrol and diesel between November 2014 and January 2015 to lessen the reduction in retail rates, which followed falling international oil rates.
The four excise duty hikes during this period totalled ₹7.75 per litre on petrol and ₹6.50 a litre on diesel. It led to about ₹20,000 crore in additional revenue to the central government, helping it meet its fiscal deficit target.
Petrol currently cost ₹59.35 per litre in Delhi while diesel costs ₹45.03 a litre.