Fuel excise duty cut ‘credit negative’ for India, fiscal deficit may slip to 3.4%: Moody’s


Fuel excise duty cut ‘credit negative’ for India, fiscal deficit may slip to 3.4%: Moody’s

The excise duty cut on petrol and diesel is credit negative for India as it will reduce government revenue and increase fiscal deficit by 0.1 per cent to 3.4 per cent of GDP in the year ending March 2019, Moody’s Investors Service said on Tuesday.

Also, the earning of public sector oil marketing companies (OMCs) would be “negatively affected” as they also absorbed Rs 1 per litre cut in their pricing, Moody’s said.  The government on Friday cut excise duty on petrol and diesel by Rs 1.5 a litre, sacrificing Rs 10,500 crore revenue in the current financial year.

“Overall, excise duty cuts are credit negative because they will reduce government revenue collection and increase India’s fiscal deficit,” Moody’s said in a statement. Read More

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