Petrol and diesel prices are at an all-time high in India. After a long rally of fuel prices, Finance Minister Arun Jaitley today on 04 October, announced marginal relief for citizens with a cut in petrol and diesel excise duty and urged the State Government to reduce the VAT on Fuels. A cut of Rs. 1.50 in Excise duty and another Re 1 drop by oil marketing companies, taking the cut in fuel prices to Rs. 2.50.
FM Arun Jaitley appealed to the states to match the centre’s effort by reducing VAT (value-added tax) by Rs. 2.50 so that the total benefit to citizens is at least Rs. 5. Immediate after his appeal, Six BJP-ruled states — Uttar Pradesh, Gujarat, Maharashtra, Chhattisgarh, Assam and Tripura, responded by dropping fuel prices by Rs. 2.50. After the tax cut at central and state level, both petrol and diesel will be cheaper by Rs 5 in these states.
Rajasthan is yet to announce the latest cut on fuel prices. Last month the Rajasthan Government announced a reduction in the VAT on fuel prices by 4 per cent to give relief to the customers. With the latest move, prices of petrol and diesel in the poll-bound state come down by Rs 2.5 a litre in the state.
In Rajasthan, Petrol price revised by 15 and diesel by 20 Paise per Litre on October 04, 2018, Petrol price in Rajasthan is Rs. 84.47 and Diesel is Rs. 77.78 Per Litre including Rajasthan State govt and Central Excise taxes. Jharkhand has reduced diesel prices by Rs. 2.50, but not of petrol. All BJP-ruled states are expected to cut fuel prices sooner as reported in media.
Some states – Rajasthan, Andhra Pradesh, West Bengal and Karnataka – had earlier slashed Value Added Tax. Governments in Karnataka, Kerala and West Bengal announced they would not cut the rates after Jaitley’s request, while Delhi and Odisha said they will decide in the next few days.
Mr Jaitley informed that The Rs. 2.50 benefit for citizens is within the control of the government and oil marketing companies. The finance minister said. “I am sure the states will also start delivering immediately”.
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 finance minister said that the excise duty cut would dent the government’s tax revenue by Rs. 10,500 crores. Jaitley said that Even though the government is confident of achieving the fiscal deficit target.
So far, the following states have decided to cut fuel prices by Rs 2.50, which means the in total, fuel prices will be reduced by Rs 5 in these states:
- Uttar Pradesh
- Madhya Pradesh
- Himachal Pradesh
- Jammu & Kashmir
- Arunachal Pradesh
Why Fuel Prices in India Rallying?
Arun Jaitley’s announcement followed petrol and diesel prices touching a new high. In Delhi, where oil prices are the lowest among big cities, petrol is being sold at Rs. 84 per litre and diesel at Rs. 75.45 on Oct 04, 2018.
“The crude oil since yesterday has crossed 86$/bbl which is the highest in the last four years. Along with this is the additional development that in the US the interest rates have climbed to 3.2 per cent, which is also highest ever in last 7 years. Now, both these developments have led to a situation where there is a significant impact across global markets that we have seen today in form of high fuel prices.
Reaction on Center’s Step on Fuel Prices Cut
“Giving a relief of Rs. 1.50 is insignificant. It is like a needle in the haystack,” said Congress spokesperson Randeep Surjewala. The Congress, however, said the fuel cut was like a band-aid on a deep wound and called it a “panic reaction by the Modi government amid anger among people.”
Following the announcement, the stocks of oil marketing firms such as Hindustan Petroleum, Indian Oil Corporation and Bharat Petroleum fell by over 18 per cent as they would be sharing the burden of the fuel price cut at a time when crude prices are high.
Gujarat CM Vijay Rupani tweeted “Reciprocating positively to FM’s announcement, the Govt Of Gujarat has also decided to reduce Rs 2.50 on both petrol & diesel. Thus petrol & diesel wd be Rs 5 cheaper in the State of Gujarat,”
Maharashtra CM Devendra Fadnavis thanked PM Modi and Finance Minister Arun Jaitley for excise duty cut. “Maharashtra Government also decided to give additional relief of Rs 2.5/litre on Petrol to give a total benefit of Rs 5/litre in the State of Maharashtra,” Fadnavis tweeted.
Already a large number of steps have been taken in this regard and many more can be taken depending on the situation,” Jaitley said.
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(Image Courtesy: Zee Business)