Move could fetch the exchequer Rs 14,000 cr, help the govt bridge FY16 fiscal deficit
The government is likely to restore Customs duty on crude oil in the coming Budget, a move that might fetch the exchequer around Rs 14,000 crore (Rs 140 billion) next financial year and help the government meet its target of reining in the fiscal deficit at 3.6 per cent of gross domestic product (GDP) in 2015-16.
According to sources, the government could re-impose the duty, scrapped in 2011 amid high global oil prices, as crude oil prices have been weakening and there is hope these will soften further. The finance ministry is considering re-imposing the duty on crude oil at a rate of three per cent, sources say.
In 2013-14, India imported 3.86 million barrels a day of crude oil, according to Reuters data. If consumption in 2014-15 remains at the same level, imports will stand at 1,409 million barrels. At $53.83/barrel for the Indian crude oil basket, the country’s total import bill will stand at about $76 billion. Three per cent of that (the likely Customs duty) comes to $2.3 billion, or Rs 14,186 crore at 61.68/dollar.
Case for a duty hike
3%: The likely duty on crude oil that Budget 2015-16 might announce
Rs 14,000 cr: The estimated mop-up by the government; this is 7% of the annual Customs collection
4: The number of times the government has raised excise duties on petrol and diesel since November
Rs 21,000 cr: The government’s estimated mop-up through these hikes
5%: The Customs duty in 2011, which was removed due to escalating crude prices
The government is likely to restore Customs duty on crude oil in the coming Budget, a move that might fetch the exchequer around Rs 14,000 crore next financial year and help the government meet its target of reining in the fiscal deficit at 3.6 per cent of gross domestic product (GDP) in 2015-16.
According to sources, the government could re-impose the duty, scrapped in 2011 amid high global oil prices, as crude oil prices have been weakening and there is hope these will soften further. The finance ministry is considering re-imposing the duty on crude oil at a rate of three per cent, sources say.
In 2013-14, India imported 3.86 million barrels a day of crude oil, according to Reuters data. If consumption in 2014-15 remains at the same level, imports will stand at 1,409 million barrels. At $53.83/barrel for the Indian crude oil basket, the country’s total import bill will stand at about $76 billion. Three per cent of that (the likely Customs duty) comes to $2.3 billion, or Rs 14,186 crore (Rs 141.86 billion) at 61.68/dollar.
