Published: Thu, October 04, 2018
Money | By Ralph Mccoy

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

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

As on October 4, petrol prices stood at Rs 91.34 per litre in Mumbai. The announcement was made by Finance Minister Arun Jaitely today.

After global oil prices fell in 2014, the Modi government raised the excise duty on petrol by Rs 11.77 a litre and on diesel by 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances, but then reduced the tax just once in October a year ago by Rs 2 a litre.

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.

"I am also writing to the states to make corresponding cuts in Value-Added Tax of equivalent amount so that consumers get Rs 5 relief in retail prices", he said.

"The notification in this regard (giving a relief of Rs.2.50) will be issued today and prices will be applicable immediately afterwards", he said.

Karnataka and Kerala have said that they will not be cutting state-imposed taxes on petrol and diesel.

"A large number of worldwide factors, as I have repeatedly said, primarily the rising prices of Brent crude and also the domestic measures taken in the USA in terms of policy and raising of interest rates, has a significant impact across the world", Jaitley said.

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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.

The cut, which comes ahead of assembly elections in five states - Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana and Mizoram, will cost the exchequer Rs 10,500 for the remaining half of this financial year.

Jaitley said it will be a test for those states whose leaders were only tweeting and indulging in lip sympathy.

"The government's capacity to provide relief is only when domestic factors are strong", he said.

It is only the global factors, primarily rising prices of crude and domestic policy and other measures like the interest rate hike by the U.S., which have affected India, Jaitley said adding domestic indicators were strong and stable.

Except the Current Account Deficit (CAD), which is directly linked to oil prices, all other data are encouraging, he said.

After a day of brief pause, fuel prices continued its rise on Thursday.

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