The country’s petroleum sector contributed Rs 3.41 trillion to the exchequer in the first half of the current financial year, down 4.6% on year, according to the latest data released by the Petroleum Planning and Analysis Cell. Of this, the sector contributed Rs 1.85 trillion to the centre and Rs 1.56 lakh crore to the states.
The amounts paid includes excise duty, customs duty, royalty rates on crude oil, corporate/ income tax, service tax, cess on crude oil, and such other cess and surcharges on petroleum products.
“The subsidy burden on petroleum products was Rs 4,596 crore during first half of FY24 including Rs 30,396 crore during FY23 and the onetime grant of Rs 22,000 crore on account of under recovery on domestic LPG (Liquified Petroleum Gas) to the oil marketing companies (OMCs),” the report said.
In the first half of the previous financial year 2022-23, India’s oil and gas sector had contributed Rs 3.57 trillion to the exchequer which included Rs 1.97 lakh crore and Rs 1.60 trillion to the central and state exchequer respectively. In FY22, the contribution to the exchequer stood at Rs 7.74 trillion.
The exchequer received Rs 1.41 trillion as sales tax from across states and union territories in the first six months of the current fiscal. The central government has levied an excise duty of Rs 1.24 trillion on the sector from April to September compared to the excise duty of Rs 2.88 trillion in FY23, the data showed.
In May 2022, the central government had reduced the excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre to keep a check on the high fuel prices. It has also levied an additional basic excise duty of Rs 2 per litre on unblended petrol intended for retail sale from November 2022.
Even after a surge in the global crude oil prices post the Russia-Ukraine war, the oil marketing companies had kept the auto fuel prices unchanged. However, latest reports suggest that the government is likely to cut the prices of petrol and diesel to the tune of Rs 4-6 per litre owing to lower crude prices in the global markets presently.
Crude oil prices have been trading in the lower range of $73-78 per barrel currently after touching their highest level of $97 per barrel in September. Even if this happens, the price cut is unlikely to impact the profitability of OMCs but bring their marketing margins closer to normative levels, analysts say.
“Currently, the diesel and petrol gross marketing margins of OMCs are high at Rs 6 and Rs 11 per litre respectively, much higher than the normative level of Rs 3 and Rs 4 per litre each, hence a Rs4-6 per litre cut at retail level would essentially bring their margins closer to normative levels, without hitting their profitability as such,” Madhavi Arora, Lead Economist at Emkay Global had said.