While consumers across the country will be dealing with higher service tax outgo due to an additional levy of Krishi Kayan cess starting today, the government has further increased the burden; this time by steeply hiking the prices of petrol and diesel in a late development yesterday.
On Tuesday night, petrol price was hiked by Rs 2.58 a litre and diesel by Rs 2.26 per litre, the second increase in rates this month. Petrol will cost Rs 65.60 per litre in Delhi after the increase while diesel will cost Rs 53.93/litre. Prices were last hiked on May 17.
Further, the government today also increased prices of non-subsidised LPG cylinder by Rs 21 and that of ATF by 9.2 percent.
The sharp rise in aviation turbine fuel prices comes at a time when the domestic aviation passenger traffic posted higher growth for the 13th straight month to April, mainly on the back of lower fuel prices.
"India's domestic traffic soared 21.8 percent, marking the 20th month of double-digit traffic growth and the 13th consecutive month it has led the domestic markets," global airlines body International Air Transport Association (IATA) said on Tuesday.
"Demand for domestic travel climbed 4.1 per cent in April compared to April 2015, while capacity increased 3.8 per cent, causing load factor to rise 0.3 percentage points to 81.4 per cent," IATA said.
However, with the fresh hike in ATF prices, industry experts feel the advantage of robust air passenger traffic may face challenges as a possibility of increased fuel prices being passed on to consumers cannot be ruled out going ahead.
"The current level of international product prices of petrol and diesel and INR-USD exchange rate warrant increase
in price of petrol and diesel, the impact of which is being passed on to the consumers with this price revision," said Indian Oil Corp (IOC).
The movement of prices in the international oil market and INR-USD exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes, it added.
Besides this, a slew of budgetary proposals, including 0.5 per cent agriculture cess on all services will kick in beginning today.
With the imposition of Krishi Kalyan Cess (KKC), the total incidence of service tax will increase to 15 percent, thus making eating out, phone usage, air and rail travel, expensive.
With PTI inputs