Excise duty on petrol, diesel cut by ₹2 per litre


Why in news?

    • The government  slashed the excise duty on petrol and diesel by ₹2 per litre, effective from October 4
      • to infuse some festive cheer in a slowing economy
      • dispel the RBI’s worries about inflationary pressures that are holding back interest rate cuts.

Rationale behind this decision

    • to cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on retail sale prices of petrol and diesel
    • to protect the interest of common man.
    • This rise in the prices of petrol and diesel is also reflected in WPI inflation
    • WPI has increased to 3.24% for the month of August 2017, as compared to 1.88% for the month of July 2017,
    • Government to lose about ₹13,000 crore during the remaining part of this financial year on account of reduction . 

What is WPI?

      • Wholesale Price Index (WPI) measures the average change in the prices of commodities for bulk sale at the level of early stage of transactions.
      • The index basket of the WPI covers commodities falling under the three major groups namely 
        1. Primary Articles
        2. Fuel and Power and
        3. Manufactured products.
    • The revision OF WPI IN 2017-
      •  shifting the base year to 2011-12 from 2004-05
      • changing the basket of commodities
      • assigning new weights to the commodities
    • WPI basket does not cover services.
    • In India WPI is also known as the headline inflation rate .
    • Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry calculates the WPI..
Source: The Hindu

Posted by Jawwad Kazi on 4th Oct 2017
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