As 10 States Follow Centre In Slashing Fuel Prices, Kerala Refuses

FM Arun Jaitley addressing a press conference at North Block in New Delhi

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.

"We are writing to the state governments that as the central government is cutting Rs 2.50 on both petrol and diesel, they do the same", Jaitley added.

In the announcement, Jaitley has also asked state governments to announce a matching reduction in duties and taxes levied by the state, which could see the prices decrease even further.

Apart from this, the oil marketing companies in India have been asked to bear the remaining burden of Re 1 per every litre and with this, the customers will get a relief of Rs 2.50 per litre on both petrol and diesel. Petrol rates increased by Rs 0.15 per litre and diesel rates increased by Rs 0.20 per litre on Thursday.

The government on Thursday announced a Rs 2.50 per litre cut in petrol and diesel prices - comprising an excise duty reduction of Rs 1.50 per litre and a Re 1 reduction at the oil companies' end. Of the Rs 2.5 cut, the Centre will bear Rs 1.5 of the burden and oil marketing companies will take a hit of Re 1 per litre. "This will be a test for all state governments, especially leaders who were only offering lip service earlier", Mr Jaitley pointedly remarked.

Maharashtra, Gujarat and the other BJP ruled states were quick to hear him. "If the government wishes to stick to its glidepath of fiscal consolidation, then it will have to cut its expenditures significantly", said Rupa Rege Nitsure, chief economist at L&T Finance Holdings.

The Government will request state governments to cut down, he said.

Brent oil on Wednesday crossed $86 per barrel, which is the highest in the last four years, and rising interest rates in the U.S. have a significant impact across global markets, said Jaitley.




Transport fuel prices have continued on a daily record-breaking upward movement with petrol inching closer to Rs 84 in Delhi and having already crossed the Rs 91 a litre mark in Mumbai. "Several macroeconomic data is indicating stable measures".

Rupee Thursday dropped to 73.77 against the dollar, resulting in expensive crude imports.

Jaitley said the excise duty cut would have an impact of Rs 10,500 crore on central government's tax revenues.

Rajasthan, Andhra Pradesh and Karnataka are among the handful of states which have reduced Value-Added Tax to give some comfort to consumers.

"The impact will be about Rs 21,000 crore for the full fiscal". The price cut would be effective from midnight tonight. "Each and every state has its own situation, so first let the letter come".

"We will also write to states, asking them to reduce VAT taxes by another Rs 2.5 per litre".

Maharashtra charges the highest sales tax and VAT on petrol at 39.12 per cent.

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