Shares of Reliance Industries (RIL) fell by more than 4% on Friday, causing a huge decline of about Rs 82,000 crore in the company’s market value. This decline came at a time when the government re-imposed windfall tax on the export of diesel and ATF (air turbine fuel). This decision increased the concern of investors and pressure was also seen on the stock market.
Government’s argument: ensuring domestic supply
Finance Minister Nirmala Sitharaman said that the purpose of increasing the export duty on diesel by Rs 21.5 per liter and ATF by Rs 29.5 per liter is to maintain their adequate availability in the country. Amidst the increasing instability in the global oil market, the government wants to balance the revenue from the energy sector.
Relief to domestic consumers also
On one hand, the government increased the export duty, while on the other hand, it reduced the excise duty on petrol and diesel to provide relief to domestic consumers. Special excise duty on petrol has been reduced to Rs 3 per liter, while on diesel it has been completely abolished.
Effect of increasing the price of Naira Energy
This decision has come at a time when Nayara Energy had recently increased the price of petrol by Rs 5 and diesel by Rs 3 per liter. Expressing concern over this increase, dealers have expressed fear of decline in demand. There are also indications of reduced fuel supply at some places.
RIL’s export business and cleanliness
Mukesh Ambani-led RIL is one of the largest companies in the country and is a major exporter of ATF and diesel. Its refineries at Jamnagar produce about one-fourth of India’s total ATF production. Meanwhile, the company has rejected the news of purchasing crude oil from Iran as completely false and misleading.
wide impact on the market
The fall in RIL shares also affected Sensex and Nifty, which fell by about 2%. The stock has fallen by about 4% in the last 5 days and about 3% in a month, due to which investors are worried.