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The Indian government has increased the export duties, also known as windfall tax, on diesel and Aviation Turbine Fuel (ATF).
The windfall tax on diesel exports has been raised to ₹55.5 per litre.
The export duty on ATF has been set at ₹42 per litre.
These revised duties are effective immediately.
A 'windfall tax' is a higher tax levied by a government on companies that have benefited from something they were not responsible for, such as a sudden surge in commodity prices (e.g., crude oil). It aims to redistribute these unexpected profits. An 'export duty' (or export tax) is a tax on goods that are exported out of a country. Governments impose export duties to make exports more expensive, thereby discouraging them. This can be done to ensure sufficient domestic supply, stabilize domestic prices, or generate revenue.
Simple Analogy: Imagine a company unexpectedly finds a gold mine on its property due to a geological survey it didn't commission. A windfall tax is the government taking a share of that sudden, unearned profit. An export duty is like a toll gate fee specifically for goods leaving the country, making it more expensive to send them abroad.
Windfall tax rates are often linked to international crude oil prices. Higher crude prices lead to higher profits for refiners, making a windfall tax more likely.
By potentially increasing domestic supply and stabilizing local fuel prices, these duties can indirectly help manage inflation within the country.
Export duties affect the volume and value of exports, influencing the country's overall trade balance and current account position. (Relevant to UPSC PYQ 2020)
Windfall taxes are a tool of fiscal policy used by the government to manage revenue and influence economic activity.
GS Paper III (Economy - Government Budgeting, Fiscal Policy, Energy Sector, International Trade)
General Awareness (Indian Economy, Current Affairs)
General Awareness (Economic & Financial News, Government Policies)
General Awareness (Indian Economy, Current Affairs)
Indian Government Bond Yields are influenced by which of the following? 1. Actions of the United States Federal Reserve 2. Actions of the Reserve Bank of India 3. Inflation and short-term interest rates Select the correct answer using the code given below.
Answer: 1, 2 and 3
With reference to the international trade of India at present, which of the following statements is/are correct? 1. India's merchandise exports are less than its merchandise imports. 2. India's imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years. 3. India's exports of services are more than its imports of services. 4. India suffers from an overall trade/current account deficit. Select the correct answer using the code given below:
Answer: 1, 3 and 4 only
Consider the following statements: 1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities. 2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments. 3. Treasury bills offer are issued at a discount from the par value. Which of the statements given above is/are correct?
Answer: 2 and 3 only
Medium to High, especially when global commodity prices are volatile.
A tax on unexpected large profits.
A tax levied on goods leaving the country.
Specialized kerosene-based fuel for aircraft.