New Delhi: The government has increased excise duty on diesel and petrol by Rs 2 a litre, and said it would set aside the proceeds to build roads.The new levy won’t affect the price that consumers pay while filling up vehicles at pumps, as it would be offset by fuel retailers against a fall in crude oil prices. This is the third time since November that the government is increasing the duty, which has kept the fall in local fuel prices much smaller compared with international rates.State-run retailers have, however, cut prices of non-subsidised cooking gas by Rs 43.50 per cylinder. Rates of aviation turbine fuel were also cut by Rs 7,500 per kilolitre for domestic airlines and $109 per kilolitre for international carriers, industry executives said.In a statement, the finance ministry said the decision to raise the duty was made “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 increased tax could fetch the government nearly Rs 6,000 crore in the remaining three months of the current financial year. The higher duty is effective Friday.“Allocation of these resources to the road sector will also spur economic activity and employment generation arising from the road-construction sector,” the ministry said.The excise duty hike came a day after state oil marketing companies decided to retain higher margins from the fall in crude price to offset their inventory losses. Many industry executives were previously expecting at least a Rs 2 per litre fall in the prices of the two fuels starting Thursday.But now, a substantial portion of the margin has been taken away by the government to fund its infrastructure projects, said industry and government officials.The price of Indian crude basket was pegged at $53.53 a barrel on December 31. This is less than half the $108.76 a barrel a year ago.In the international market, oil prices fell on Wednesday to a five-and-halfyear low and ended with their second-biggest annual decline ever, because of pressure from a global oversupply. Markets were closed on ThursdayThe unprecedented fall in crude oil price is helping the government increase its revenue from fuel sales, a welcome change in a country where fuel subsidies have been a major burden on the government. Though pricing of both petrol and diesel is decontrolled, cooking gas and kerosene are still heavily subsidised. Still, petroleum subsidies are set to fall dramatically in the current fiscal year.The under-recovery on subsidised domestic cooking gas is down to Rs 234 a cylinder from Rs 763 in January last year while that on kerosene has fallen to Rs 19 a litre from Rs 36.The government, meanwhile, launched direct cash transfer of cooking gas subsidy in 622 districts on Thursday. In these places, customers will pay market rates for gas and get the subsidy in their banks, oil ministry officials said.The Direct Benefit Transfer of LPG (DBTL) programme was re-launched as PAHAL (Pratyaksh Hanstantrit Labh) in 54 districts on November 15 by the NDA government.