Four states announce additional cut in fuel prices after Centre’s move

Four states announce additional cut in fuel prices after Centre’s move

Speaking at a press conference on Thursday, Finance Minister Arun Jaitley announced that the cut will be effected through slashing of excise duty to the tune of Rs 1.50 per litre, while the oil marketing companies (OMCs) will absorb the impact to the tune of Re 1 per litre.

He also asked state governments to follow suit by cutting a sales tax or VAT by a similar amount.

In another tweet, Fadnavis announced that the state government will heed the government's request and cut the price of petrol by Rs 2.5 per litre, bringing the total benefit for end consumers to Rs 5 per litre in the state.

He also took a swipe at the previous Congress-led government at the Centre, saying it had "pawned" national resources by issuing oil bonds while the Narendra Modi government showed its sensitivity by reducing the prices.

Speaking on the reason for price cut, the Finance Minister said that there has been a significant impact of higher interest rates in the USA and crude oil prices on rising fuel prices in the country.

Mr. Jaitley said this would have only a marginal impact on the fiscal deficit - less than 0.05% of the fiscal deficit - since the excise duty cut would be balanced out by higher direct tax collections. PM Modi expressed concerns over rising fuel prices in the season of Rabi crops. "First we will see the order, then make a decision on petrol and diesel [prices]", he added.

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Maharashtra chief minister Devendra Fadnavis said that his government also decided to make a matching cut as this would be a "great relief" to the people.

The major announcement comes after Jaitley met Oil Minister Dharmendra Pradhan to look at options to mitigate the impact of hiking fuel prices on the economy. "Several macroeconomic data is indicating stable measures".

The minister also maintained that Thursday's decision did not represent a re-regulation of fuel prices.

After the minister's announcement, may states including Jharkhand, Gujarat and Chhattisgarh too announced a reduction in fuel prices.

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

"We will also write to states, asking them to reduce VAT taxes by another Rs 2.5 per litre". "The government has cut down borrowing this year by Rs 70,000 crore". States saw their Value-Added Tax revenue from petro goods rise from Rs 1,37,157 crore in 2014-15 to Rs 1,84,091 crore in 2017-18.

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