The government has sent feelers to oil companies that it might cut the excise duty on petrol to lower their under-recoveries, a move that will benefit the consumers as well.
As per reports, the finance ministry is actively considering a proposal from the oil ministry to slash the excise duty. It is learnt that the reduction of excise duty on petrol is intended to avert the looming hike in the prices of petrol.
At present, the government is charging excise duty of Rs 14.45 for every litre of petrol as the oil companies continue to lose over Rs 9 a litre for selling petrol below the international market price.
It was way back in 2008 when the international crude prices hit USD 140, the government had slashed the excise duty on the auto fuel.
With the widening fiscal deficit and subsidy bill topping the priority list in Budget 2012, a senior finance ministry official said that by the end of June, the government will decontrol the prices of petrol which would help in containing the deficit.