Government cuts fuel prices by Rs 2.50, states announce additional relief

Prices of diesel and petrol have been reduced by Rs. 2.50 per litle by the government on Thursday. Price cut in states like Gujarat and Maharashtra would be Rs 5 after they matched the announcement with a similar reduction in local sales tax or VAT rates.

Finance Minister Arun Jaitley. PTI Photo

NEW DELHI: Finance Minister Arun Jaitley on Thursday announced cut in excise duty in prices of petrol and diesel. The excise duty on petrol and diesel to be reduced by Rs. 1.50 and the oil marketing companies Oil marketing companies will absorb Re. 1 taking the total cut in fuel prices to Rs. 2.50, he said. Jaitley said the finance ministry will write to the state governments that as the central govt is cutting Rs 2.50 on both petrol and diesel, they also do the same. The finance minister said the excise duty cut would have an impact of Rs 10,500 crore on central government's tax revenues. Following Jaitley's appeal, Gujarat chief minister Vijay Rupani announced an additional Rs 2.50 cut in diesel petrol prices, taking total relief to Rs. 5 per litre. Also, in Maharashtra chief minister Devendra Fadnavis said his government will reduce petrol price by Rs 2.50 per litre. 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. The Uttar Pradesh government has also cut diesel and petrol prices by Rs 2.50 per litre in addition to Centre's reduction. Later in the day other states also announced a similar reduction in fuel prices. The reduction followed petrol and diesel prices touching new highs. Inflation in India, however, is still moderate at less than 4 pe cent and higher direct tax collections give comfort with regard to fiscal deficit, he said adding domestic macroeconomic indicators are strong and stable, except for current account deficit (CAD).