<div>India has raised factory gate duties on petrol and diesel by 2 rupees ($0.03) a litre to fund infrastructure projects in the current and next fiscal years.</div><div> </div><div>The increase, the third since Prime Minister Narendra Modi lifted diesel price controls in October, seeks to cash in on lower world oil prices to bolster strained government finances without stoking inflation.</div><div> </div><div>The allocation of these resources to fund 15,000 km of road projects would spur economic activity and boost employment, the government said in a statement.</div><div> </div><div>The higher excise duties came into effect from January 2.</div><div> </div><div>The government last raised excise duties on petrol and diesel by 2.25 rupees a litre and 1 rupees a litre respectively on December 2.</div><div> </div><div>India's fiscal deficit was 5.25 trillion rupees ($83 billion) during April-November, or 98.9 per cent of the full-year target. The deficit was 93.9 per cent during the same period a year ago.</div><div> </div><div>The third excise duty hike since November will help raise additional Rs 6,000 crore during remaining three months of the current fiscal.</div><div> </div><div>The oil firms have skipped cutting rates of the two fuels that had become necessary as international oil rates plunged to their lowest level since May 2009.</div><div> </div><div>The excise duty hike has now been set off against the reduction in rates that was due because of slide in oil prices.</div><div> </div><div>The slump in global oil rates had warranted a price cut of Rs 3.22 per litre in petrol and about Rs 3 in diesel and even after adjusting the excise increase, oil firms will have a neat margin of over Re 1 per litre.</div><div> </div><div>"In order to fund the ambitious infrastructure development programme of the government, particularly the building of 15,000-km of roads, during current and next financial year, the government has decided to increase basic excise duty on petrol and diesel by Rs 2 per litre," an official statement said.</div><div> </div><div>Together with Rs 1.50 a litre excise duty hike effected on both products from November 12 and Rs 2.25 per litre increase in duty on petrol and Re 1 on diesel from December 2, the government will mop up about Rs 17,000 crore this fiscal to contain fiscal deficit.</div><div> </div><div>(Agencies)</div>
