New Delhi: The central government on Thursday gave marginal relief to masses from runaway fuel prices and cut petrol and diesel rates by Rs 2.50 a litre with effect from midnight.
The decision was announced by finance minister Arun Jaitley after he held a closed-door meeting with Prime Minister Narendra Modi and petroleum minister Dharmendra Pradhan. The Centre has reduced central excise duties by Rs 1.50 a litre while oil marketing companies have been asked to absorb Re 1 a litre, Jaitley said.
He also asked the states to match the cut announced by the states to give further relief to the masses and Gujarat and Maharashtra immediately followed suit.
Gujarat chief minister Vijay Raupani and Maharashtra chief minister Devendra Fadnavis tweeted to announce the rate cuts in their states.
‘Maharashtra Government also decided to give additional relief of Rs 2.5/litre on Petrol to give total benefit of Rs 5/litre in the State of Maharashtra,” Fadnavis tweeted. Rupani also announced that petrol and diesel would be cheaper by Rs 5 cheaper in Gujarat.
Maharashtra Government also decided to give additional relief of ₹2.5/litre on Petrol to give total benefit of ₹5/litre in the State of Maharashtra.
— Devendra Fadnavis (@Dev_Fadnavis) October 4, 2018
Some states – Rajasthan, Andhra Pradesh, West Bengal and Karnataka – had earlier slashed VAT to pass on the benefits to people, but most other states have not taken any action so far.
The reduction followed petrol and diesel prices touching new highs. In Delhi, where the fuel prices are the lowest among all metros and most state capitals, petrol was sold at Rs 84 per litre and diesel at Rs 75.45 per litre on Thursday.
In Mumbai, diesel breached the Rs 80-mark for the first time on Thursday while petrol was sold at Rs 91.34 per litre. Petrol is already being sold at over Rs 92 per litre in several districts of Maharashtra as well as Bihar.
Jaitley said the excise duty cut would have an impact of Rs 10,500 crore on central government’s tax revenues. 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.
The Central government charges Rs 19.48 excise duty on a litre of petrol and Rs 15.33 on diesel.
This year alone, petrol and diesel prices have been hiked by Rs 13.91 and 15.59 respectively in the national capital. Prices have seen a similar hike in other cities as well.
The finance minister added that the central government will not go back on deregulation of fuel prices. “We have to react to the situation and give relief without impacting fiscal deficit. We cannot do it at the cost of fiscal position and give it when it can absorb it,” he said.
