InvestorQ : Has the lockdown really impacted the revenues that governments earn from oil as there is hardly any transport plying on the streets?
rhea Babu made post

Has the lockdown really impacted the revenues that governments earn from oil as there is hardly any transport plying on the streets?

Answer
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5 months ago


The losses are likely to be huge. For long, duties on diesel and petrol as well as on ATF were the cash cows for the government of India and the states. All that has suddenly changed! The oil price crash has actually been driven by massive demand destruction in crude and refined products such as petrol, diesel and aviation turbine fuel (ATF). This is likely to negatively impact the petro-taxes that the Centre and States collect. Remember that the petroleum sector contributed 92% to the Centre’s excise duty receipts in FY19. In fact, on an overall basis, 20% of the Centre’s revenue receipts and 8% of the State revenue receipts came from the petroleum sector. Consider some startling numbers in March 2020. Consumption of petroleum products during March fell 17.8%. While petrol consumption fell 16.4%, diesel consumption fell by 24.2% and ATF sales fell 32.4%. In addition, various cess, GST, VAT and even dividends get impacted. April is likely to be worse.