Excise duty collections from petroleum products being used in infra development: Nitin Gadkari

Union Minister Nitin Gadkari on Thursday said excise duty collected from petroleum products are being used for infrastructure development and other development items.

The road transport and highways minister said this in the Lok Sabha while replying to a question on the impact of rising fuel prices on the logistics cost of transportation in the country.

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"The excise duty rates on petroleum products have been calibrated to generate resources for infrastructure and other development items of expenditure, keeping in view the prevalent fiscal situation," Gadkari said.

According to the minister, the logistics cost of transportation through road depends on several factors such as capital cost of the vehicle, salaries, insurance, permit tax, maintenance, fuel, toll tax and other miscellaneous expenses.

The excise collections on petrol and diesel jumped by 88 per cent to Rs 3.35 lakh crore in the last fiscal ended March 31, 2021, after excise duty was raised to a record high.

The excise duty on petrol was hiked from Rs 19.98 per litre to Rs 32.9 last year to recoup gains arising from international oil prices plunging to a multi-year low as the pandemic gulped the demand.

Citing a study conducted by the Ministry of Road Transport & Highways through a consultant, Gadkari said the impact of fuel is 34 per of the total transport freight cost by vehicle.

"The transport companies may or may not pass the increased cost depending upon the market situation or capacity to absorb additional cost etc," he said, quoting the study.

The prices of petrol and diesel are market-determined with effect from June 26, 2010, and October 19, 2014, respectively.

Since then, the public sector oil marketing companies (OMCs) have been taking the appropriate decision on the pricing of petrol and diesel based on international product prices and other market conditions.

Replying to a separate question, Gadkari said the national and local level lockdowns and restrictions due to COVID-19 posed constraints to the movement and supply/availability of materials, machinery and labour, which affected the progress of works.

"However, due to several initiatives taken by the government under Atmanirbhar Bharat to provide relief measures to contractors/ concessionaires/ consultants, the maintenance and development work on

National Highways have overshot the targets," he noted.

The minister pointed out that NHAI awarded 31 projects of 890 km length at a cost of Rs 26,322 crore from April to August 2020.

The length of projects awarded by NHAI in the April to June period of 2021-22 stood at 383 km.