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Gas Prices. Drop of gas in the format of the dollar sign.; Shutterstock ID 16024516; PO: 4700085152

Government cuts petrol, diesel prices by Rs 2.50; asks the state

Petrol Price

Fuel price: Finance Minister Arun Jaitley appealed to the states to match the centre’s effort by reducing value-added tax or VAT by Rs. 2.50 on Petrol Price so that the total benefit to citizens is at least Rs. 5 Petrol Price

Finance Minister Arun Jaitley today announced marginal relief for citizens from runaway fuel prices with excise duty cut of Rs. 1.50 and another Re 1 drop by oil marketing companies, taking the cut in fuel prices to Rs. 2.50.

He appealed to the states to match the centre’s effort by reducing value-added tax or VAT by Rs. 2.50 so that the total benefit to citizens is at least Rs. 5. Six BJP-ruled states — Uttar Pradesh, Gujarat, Maharashtra, Chhattisgarh, Assam and Tripura — responded by dropping fuel prices by Rs. 2.50. Jharkhand has reduced diesel prices by Rs. 2.50, but not of petrol.

All BJP-ruled states are expected to cut fuel prices by this evening, said sources.

The Congress, however, said the fuel cut was like a band-aid on a deep wound and called it a “panic reaction by the Modi government amid anger among people.”

“Giving a relief of Rs. 1.50 is insignificant. It is like a needle in the haystack,” said Congress spokesperson Randeep Surjewala.

Delhi Chief Minister Arvind Kejriwal tweeted that the Modi government increased excise duty on fuel by Rs. 10 and today reduced just Rs. 2.50. “It is a sham. The Centre should have at least reduced prices by Rs. 10 per litre,” he tweeted.

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The Rs. 2.50 benefit for citizens is within the control of the government and oil marketing companies, the finance minister said. “I am sure the states will also start delivering immediately,” Mr Jaitley said, amid the opposition’s allegations that the economy is under severe stress.

The excise duty cut would dent the government’s tax revenue by Rs. 10,500 crores, the finance minister said. Taxes on petrol and diesel, which account for more than a third of retail fuel prices, are one of the biggest sources of income for the government.

Arun Jaitley’s announcement followed petrol and diesel prices touching a new high. In Delhi, where oil prices are the lowest among big cities, petrol is being sold at Rs. 84 per litre and diesel at Rs. 75.45.

Mr Jaitley said crude oil touched a four-year high of $86 a barrel on Wednesday and interest rates in the US have reached a seven-year high.

Petrol Price

Following the announcement, the stocks of oil marketing firms such as Hindustan Petroleum, Indian Oil Corporation and Bharat Petroleum fell by over 18 per cent as they would be sharing the burden of the fuel price cut at a time when crude prices are high.

States Cut VAT Petrol Price

Uttar Pradesh, Assam, Chhattisgarh, Tripura, Jharkhand, Gujarat, Madhya Pradesh, Himachal Pradesh and Haryana reduced VAT by Rs 2.50 a litre on both petrol and diesel, according to tweets by their chief ministers. Maharashtra cut VAT by Rs 2.5 a litre on petrol. Jammu & Kashmir, which is under the central rule, also reduced the levy, according to ANI.

BJP-ruled Rajasthan and Karnataka, where the Congress shares power with the Janata Dal (Secular), had lowered VAT on auto fuels last month, according to media reports.

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