Centre gives Rs 2.50 per litre relief on petrol, diesel; some states announce additional Rs 2.50 cut

Government has announced a relief of Rs 2.50 on petrol and diesel to consumers at a time when the Brent crude has touched $86 per barrel and there is uncertainity in the international crude oil market.

Announcing the decision, Finance Minister Arun Jaitley said that the Centre will cut Rs 1.50 in excise duty on fuel while an additional Re 1 will be absorbed by the Oil Marketing Companies.

He has urged the state governments to cut the VAT on fuel by an equal amount. Jaitley said that the move will have an impact of Rs 10,500 crore this fiscal but the government is confident of achieving the fiscal deficit target.

The BJP-government had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.

The hike in duties had led to excise collections from petro goods more than doubling in last four years - from Rs 99,184 crore in 2014-15 to Rs 2,29,019 crore in 2017-18. States saw their VAT revenue from petro goods rise from Rs 1,37,157 crore in 2014-15 to Rs 1,84,091 crore in 2017-18.

Moderate inflation which is less than 4 per cent and higher tax mop up has given the comfort on the fiscal front, Jaitley said.

He said that the government has taken a number of measures to tackle the rising fuel prices. The RBI had earlier allowed the Oil Marketing Companies (OMCs) to raise dollars directly from the overseas market capping it at $10 billion.

The finance minister said that the government has also acted decisively on the IL&FS situation and replaced the board. The government is determined to contain he adverse impact of the IL&FS conatgion, Jaitley added.

States React to the Centre's Move

Maharashtra

Reacting to the Centre's move, Maharashtra has cut rs 2.5 per litre on petrol and diesel. Both the commodities will now be cheaper by Rs 5 in the state.

Gujarat

Gujarat reciprocated by cutting Rs 2.5 per litre on petrol and diesel. The move will make both petrol and diesel cheaper by Rs 5 per litre in the state.

Uttar Pradesh

Another BJP-ruled state Uttar Pradesh also reduced the price by Rs 2.5 per litre giving a relief to consumers.

Tripura

Tripura also cut the prices of petrol and diesel after the Centre announced a relief of Rs 2.5 per litre.

Jharkhand

Jharkhand joined other states in cutting the prices by Rs 2.5 per litre on petrol and diesel.

Assam

Assam slashed the price of petrol and diesel by rs 2.5 per litre after the Centre's announcement.

Madhya Pradesh

Madhya Pradesh joined other states in cutting the prices by Rs 2.5 per litre on petrol and diesel.

courtesy:economictimes