On Wednesday, shares of oil marketing companies like Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd jumped up to 13 per cent, a day after the hike in excise duty on petrol and diesel.
Bharat Petroleum Corporation Ltd (BPCL) shares jumped by 9.99 per cent while the shares of Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation (IOC) dropped by 13 per cent and 7.49 per cent respectively on BSE.
Tuesday evening the government hiked excise duty on petrol by Rs 10 per litre and that on diesel by Rs 13 a litre to Oil marketing firms’ shares drops by 13% due price hike, to make some profit against falling crude oil prices.
The government will gain on the brink of Rs 1.6 lakh crore in additional revenues this fiscal from a record increase in excise duty on petrol and diesel, which can help make up for revenue lost during COVID-19 lockdown.
However, the petrol price remained unchanged at Rs 71.26 a litre and diesel at Rs 69.39 and state-owned oil firms made a profit from fall in international oil rates.
This is the second hike in excise duty in less than two months and will help the government gain more than Rs 1.6 lakh crore in additional revenues. Moreover, the slump in consumption due to COVID-19 lockdown will add the benefit.
Earlier, in March, the excise duty was raised on petrol and diesel by Rs 3 per litre, to earn an additional estimated Rs 39,000 crore. Just earlier in the week , the Delhi government too raised VAT on petrol by Rs 1.67 litre, and on diesel by Rs 7.1 per litre. Earlier too, the governments at the centre and states, have used petrol and diesel as cash cows, raising duties to reinforce the exchequer’s tax income .
According to a note by Emkay Global Financial Services, “the excise duty hike though on expected lines could are taken once demand had fully recovered. So long volumes still be low, OMCs net earnings impact would now be negative. Outlook hence depends on how quickly lockdown is lifted.”