Central government cuts excise duty on petrol, diesel
News: Central government has reduced excise duty on Petrol & Diesel by Rs. 8/litre and Rs. 6/litre, respectively from May 22. Few of the state governments also reduced VAT on Petrol & Diesel. ii) Government will provide subsidy of Rs. 200 per cylinder to beneficiaries of PMUY scheme
Views: Amid elevated global oil prices, excise duty and VAT reduction is being done to lower prices in the country. This gives some headroom to OMCs to hike prices in near to medium term. Subsidy to PMUY beneficiaries will lead to LPG subsidy of ~Rs. 6100 crore annually. We await clarity on sharing of subsidy burden. If price cuts lead to higher retail sales, it will be positive for standalone refineries as their sales volume is likely to increase.