Indian states await a big boost to their finances this year as they are on course to get an additional Rs 24,000 crore bounty or more from the Centre by way of the excise duty share on oil products this fiscal year, which is set to jump by around Rs 60,000 crore.
As per the 14th Finance Commission wards, the Centre has to part 42 per cent of the incremental excise mop up on oil products with the states from 2015 through 2020 fiscals. Since the government has been increasing the excise duty on oil products since mid 2014 after the crash in crude prices, it has been biggest contributor to tax kitty. While it contributed as much as 63 per cent of the total excise mop-up last year, up from 46 per cent in the previous year, it is going to jump by around Rs 60,000 crore this year to Rs 1,78,600 crore. The government has jacked up the basic excise duty on diesel and petrol by Rs 6.5/litre and Rs 7.75/litre, respectively, in four tranches between November 2014 and January 2015.