Excise duty on petrol, diesel cut by ₹2 per litre

Why in news?

• The government  slashed the excise duty on petrol and diesel by ₹2 per litre, effective from October 4
• to infuse some festive cheer in a slowing economy
• dispel the RBI’s worries about inflationary pressures that are holding back interest rate cuts.

Rationale behind this decision

• to cushion the impact of rising international prices of crude petroleum oil and petrol and diesel on retail sale prices of petrol and diesel
• to protect the interest of common man.
• This rise in the prices of petrol and diesel is also reflected in WPI inflation
• WPI has increased to 3.24% for the month of August 2017, as compared to 1.88% for the month of July 2017,
• Government to lose about ₹13,000 crore during the remaining part of this financial year on account of reduction . 

What is WPI?

• Wholesale Price Index (WPI) measures the average change in the prices of commodities for bulk sale at the level of early stage of transactions.
• The index basket of the WPI covers commodities falling under the three major groups namely 
1. Primary Articles
2. Fuel and Power and
3. Manufactured products.

• WPI basket does not cover services.
• In India WPI is also known as the headline inflation rate .
• Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry calculates the WPI..