Finance Minister Nirmala Sitharaman posted a series of tweets on May 21, announcing a cut on excise duty, leading to a reduction in fuel prices, petrol by ₹8 and diesel by ₹6 per litre. The repercussion of this decision will cost the government ₹1 lakh crore per annum in revenue.
Sitharaman also announced significant policy changes on coal imports, LPG cylinders, steel export, etc.
Key Policy Changes
Firstly, the Centre will provide the subsidy of ₹200 per LPG gas cylinder to approximately nine crores of Ujjwala scheme beneficiaries. It will have a profound impact on the revenue of the Centre, roughly ₹6,100 crores per annum.
Secondly, import duty on coal will be cut from 0% to 2.5% in light of the recent coal deficits in the country and national capital, Delhi, due to the current heatwave.
Thirdly, custom duty on raw materials and intermediaries for plastic items where India is highly dependent on imports will also be cut. This will help reduce the cost of the finished products. Similarly, customs duty on raw materials and intermediaries for iron and steel are in talks of being cut while its export duty will still be levied.
Chief Economist of Investment Information and Credit Rating Agency of India Limited (ICRA), Aditi Nayar, said the reduction in excise duty will assist in moderating the inflation trajectory.
She said, "Reduction in excise duty will help cool the inflation trajectory going ahead and complement monetary policy. The fiscal cost, while material, can be absorbed by higher than budgeted revenues through other taxes," as reported by the Economic Times.
Opposition Says Not Enough For People
P. Chidambaram, India's former Finance Minister, tweeted that reducing fuel prices through excise duty cuts is equivalent to robbing Peter (the common person) and paying him less.
On a similar note, Uddhav Thackeray, Chief Minister of Maharashtra, reacted to this decision by tweeting in Marathi which reads in English, "It is not right to pretend to increase prices first and then reduce rates nominally."
Chief spokesperson of Congress, Randeep Surjewala, gave a detailed record of how the government had increased excise duty on petrol by ₹10 in the last two months, 'duping' the public.
He said, "Nation doesn't need jugglery of figures to dupe the people. The nation doesn't need Jumlas. The nation needs to roll back excise on petrol and diesel to May 2014 levels of ₹9.48/litre on petrol and ₹3.56/litre on diesel. Stop deceiving, Show the courage to give relief," as reported by The Hindustan Times.
Welcome Decision For The Public?
Sitharaman, in her tweets, was quoted saying that these policies are 'devoted to the welfare of the poor,' the government has kept the average inflation lower than other Central governments to help the poor and middle classes, which form the core of India.
Praveen Khandelwal, Secretary-General of the Confederation of All India Traders (CAIT), praised the move by commenting that this will be an essential step to encourage businesses in India and give much-needed relief to around eight crore traders.
Furthermore, Union Minister of Petroleum and Natural Gas, Hardeep Singh Puri, has tweeted, "Today's decisions and steps to curb price rise on key infrastructure material such as cement, steel & plastics will bring wide-scale relief to crores of Indian families & provide pivotal support to Indian economy amidst a challenging global inflationary environment."
Also Read: India's 16-Yr-Old Chess Prodigy Praggnanandhaa Stuns World Champion Carlsen For 2nd Time This Year