Explainer: By reducing excise duty on petrol and diesel, how much inflation will fall, which things will cost less

To reduce inflation, the government reduced excise duty on petrol and diesel

Wholesale inflation has reached 15.1 percent in April. It was at 14.5 per cent in March. Retail inflation has reached an eight-year high of 7.79% in April. Before the government’s action on inflation, the Reserve Bank suddenly increased the repo rate.

on petrol excise duty ,Excise Duty) has been cut by Rs 8 a liter and diesel by Rs 6 a liter. Ujjwala Scheme (Ujjwala Scheme) will get a subsidy of Rs 200 per cylinder. There are more than 9 crore beneficiaries of Ujjwala scheme in the country. The government will give an additional subsidy of Rs 1.10 lakh crore on fertilizers. This subsidy will be different from the subsidy of Rs 1.05 lakh crore already available. Export duty on iron ore has been increased to 50 per cent. It has been increased to 15 per cent on some steel intermediates. Major cuts have been announced on import duty on iron, steel and coal and plastics.

Wholesale inflation has reached 15.1 percent in April. It was at 14.5 per cent in March. Retail inflation has reached an eight-year high of 7.79% in April. According to economists, inflation can fall by up to half a percent. When the disaster of rising inflation came on its head, finally the government’s sleep was also broken and on Saturday the central government took a big decision. Excise duty on petrol and diesel was reduced.

government gave relief

Excise duty on petrol has been cut by Rs 8 a liter and on diesel by Rs 6 a liter. That is, the government has given a big relief to the common people from the inflation of the most troubling fuel. Not only this, for the poor, the government has also announced a subsidy of Rs 200 per cylinder on the cylinders available under the Ujjwala scheme. This subsidy will be available on 12 cylinders. There are more than 9 crore beneficiaries of Ujjwala scheme in the country. That is, directly more than 9 crore families are going to get big relief from inflation.

Subsidy announcement

Now let’s come to another big announcement made by the Center on Saturday itself. So to save the industries, realty sector and other welfare schemes in the country from inflation, the government has announced a big cut in import duty on iron, steel and coal and plastics. The matter does not stop here. The government has also announced to increase the fertilizer subsidy in view of the bad effect on the farmers due to the war of Ukraine. That is, the government will give an additional subsidy of Rs 1.10 lakh crore on fertilizers.

try to control prices

This subsidy will be different from the subsidy of Rs 1.05 lakh crore already available. Along with this, efforts are also being made to control the prices of cement and increase its availability. The government has increased the export duty on iron ore, pellets and many other steel products to ban the export out of the country. Export duty on iron ore has been increased to 50 per cent. It has been increased to 15 per cent on some steel intermediates. This will reduce the prices of iron ore and steel products available to different industries in the country.

Prices of wheat and flour have increased

Recently, with the news of reduction in wheat production due to scorching heat, the prices of wheat and flour have also increased rapidly in the country. In this situation that arose suddenly, the government had to announce a ban on the export of wheat last week. With the announcements of Saturday, if the entire action of the government is seen, then it is visible that the government is engaged in the war to reduce inflation in the country at any cost. In fact, the wholesale inflation data that came last week had stunned the government.

Wholesale inflation has reached 15.1 percent in April. It was at 14.5 per cent in March. Retail inflation has reached an eight-year high of 7.79% in April. Before the government’s action on inflation, the Reserve Bank suddenly increased the repo rate.

RBI increased repo rate in May

RBI has increased the repo rate by 0.4 per cent to 4.4 per cent in early May. The purpose of this move was to reduce the excess liquidity present in the market. However, this move has also made the loan costly. The real reason for the rise in inflation was the rise in the prices of expensive fuel and food items. Well, this happened because of the big decisions of the government and the increasing impact of inflation. Now let’s come to this, how much relief you are expected to get from the government’s decision, then the first thing is petrol and diesel. Directly the price of petrol has been reduced by Rs 9.5 a liter and that of diesel by Rs 7 a liter.

Since, the government has made this deduction in the road and infrastructure cess, due to this the deduction has been completely done in the tax of the central government. That is, after the decision of the Center, the state governments can reduce VAT on fuel in their own right. Due to this, the price of oil can come down further. Due to the fall in the price of diesel, there will be a direct impact on the inflation of food and other things. Diesel is used extensively in trucks and logistics.. Now if diesel becomes cheaper then the prices of all these things will also come down.

Not only this, other steps of the government will also help in bringing down inflation in other sectors. For example, if the prices of steel, cement come down, then the prices may also come down in the realty sector. Along with this, the budget of the government’s flagship program Jal Jeevan Mission will also help in saving it from the grip of inflation. Under this scheme, the government wants to provide drinking water to every household and it requires iron and steel in items like pipes, taps. Not only this, if cement is cheap, then the budget of the houses being built under the Pradhan Mantri Awas Yojana will not deteriorate. Economists are also confirming this. Experts say that inflation can fall by about half a percent.

Inflation expected to fall

  • Bank of Baroda – 0.4%
  • HDFC Bank – 0.2%
  • QuantEco – 0.25%
  • Kotak Mahindra Bank – 0.3-.35%
  • Nomura- 0.3-0.4%

impact on the exchequer

So it was a matter of the government’s steps on inflation and the relief to the common people. Now let us see how much the burden on the pocket of the government is going to increase. So it is such that the excise cut on fuel in November 2021 and this time is going to hurt the exchequer to the tune of Rs 2.2 lakh crore. The government has also given a strong reasoning behind the high tax being charged on petrol and diesel. The government has said that Rs 90.9 lakh crore has been spent on infrastructure development between 2014 and 2022. Whereas between 2004 and 2014, this expenditure was only Rs 49.2 lakh crore.

read this also



The government is also spending an additional Rs 80,000 crore on giving free food grains to the poor. The subsidy being given on LPG cylinders is going to cost the exchequer about Rs 6,100 crore. Overall, the big announcement made by the government on Saturday is expected to provide relief in inflation directly. However, it will be possible to get an accurate idea of ​​it only in the coming days. On the other hand, the government’s treasury seems to be going awry in giving relief to your pocket.