Petrol, diesel price cut: States follows Centre’s footsteps, reduce taxes on fuel

Petrol, diesel price cut: States follows Centre’s footsteps, reduce taxes on fuel

The reduction in fuel prices come after the Opposition parties, including Congress, the Left and the Rashtriya Janata Dal (RJD) conducted a massive nation-wide shutdown following the surge in fuel prices.

Thanking Prime Minister Narendra Modi and Union Finance Minister Arun Jaitley, Fadnavis said the reduction in fuel prices will give a huge relief to citizens. Petrol rates increased by Rs 0.15 per litre and diesel rates increased by Rs 0.20 per litre on Thursday.

Alleging over "Rs 13-lakh-crore fuel loot" through the imposition of heavy excise duty on petrol and diesel and an equal amount through Value-Added Tax by BJP-ruled states, he said the people "cannot be befooled" anymore by the government and demanded answers from Prime Minister Narendra Modi and Finance Minister Arun Jaitley. He said that Rs 10,500 crore will be the impact of the excise duty cut this year.

"Giving a paltry relief of Rs 1.50 per litre is insignificant and like a needle in the haystack", he said. Gujarat government reduced petrol and diesel prices by Rs 2.50 per litre, while Maharashtra lowered petrol price by 2.50 per litre.

The cut, which comes ahead of assembly elections in five states - Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana and Mizoram, will cost the exchequer Rs 10,500 for the remaining half of this financial year.

The government has also expressed confidence it will fulfill its fiscal deficit targets, Patra noted.


Jaitley, however, downplayed fiscal implications around the fuel price cut.

Jaitley said the decision to give relief to consumers was necessitated by the uncertainty regarding the worldwide oil prices and was made possible by better-than-expected revenue collections. However, India's domestic indicators are quite strong and stable.

Except the Current Account Deficit (CAD), which is directly linked to oil prices, all other data are encouraging, he said.

Rising fuel prices have become a political controversy in India, with attention specifically focused on the high taxes that the Centre charges. So it is easier for states to forego a part of the additional revenue that they receive due to price increase.

Reactions to the central government's decision to reduce fuel prices by Rs 2.50 on Thursday ranged from adulatory to dismissive ones. After the tax cut at central and state level, both petrol and diesel will be cheaper by Rs 5 in these states.

Global oil prices have risen to four-year highs above $85 a barrel on fears of a global supply crunch, prompting US President Donald Trump to repeatedly demand the Organization of Petroleum Exporting Countries to lower prices.

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