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The Indian government has increased the export duty (windfall tax) on diesel to ₹55.5/litre and on Aviation Turbine Fuel (ATF) to ₹42/litre.
These revised duties came into effect from April 11.
The measure is aimed at taxing the extraordinary profits earned by oil companies due to high global crude oil prices and refining margins.
This fiscal adjustment is intended to boost government revenue and potentially ensure domestic fuel availability.
An **Export Duty** is a tax levied on goods when they are exported from a country. Its purpose can be to generate revenue, discourage exports to ensure domestic supply, or to make exports more expensive. A **Windfall Tax** is a higher tax rate imposed by a government on sudden, unexpected, and large profits (often called 'windfalls') earned by certain companies or industries. These profits typically arise from unforeseen external circumstances, such as a sharp increase in commodity prices, rather than from the company's operational efficiency or innovation. The aim is often to redistribute these 'excess' profits for public benefit.
Simple Analogy: Imagine a farmer who suddenly sells his crops at double the usual price due to a rare drought elsewhere. A windfall tax would be the government taking a portion of that unexpected extra profit, not because the farmer worked harder, but because of a lucky market situation.
Export duties and windfall taxes are instruments of fiscal policy, used by the government to manage revenue, influence economic activity, and achieve broader economic objectives.
The rationale for a windfall tax on petroleum products is directly linked to fluctuations in international crude oil prices, which determine the 'windfall' profits of refiners.
While primarily a revenue and domestic supply measure, by influencing exports and domestic consumption, such duties can indirectly impact India's trade balance and current account deficit.
Ensuring adequate domestic supply through export restrictions can indirectly contribute to managing inflationary pressures on fuel prices within the country.
GS Paper III - Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Government Budgeting.
General Awareness - Indian Economy, Current Affairs.
General Awareness - Economic & Financial Awareness, Current Affairs.
General Awareness - Indian Economy, Current Affairs.
The main objective of the 12th Five-Year Plan is
Answer: faster, sustainable and more inclusive growth
Which of the following are associated with 'Planning' in India? 1. The Finance Commission 2. The National Development Council 3. The Union Ministry of Rural Development 4. The Union Ministry of Urban Development 5. The Parliament Select the correct answer using the code given below.
Answer: 2 and 5 only
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
Medium for specific tax measures, High for underlying economic concepts and fiscal policy.
A tax levied on goods when they are exported from a country.
A tax on sudden, large, and unexpected profits earned by companies due to unforeseen market conditions.
A specialized type of petroleum-based fuel used to power aircraft.