Union Finance Minister Arun Jaitley on Thursday announced that the government has cut excise duty on petrol and diesel by Rs 2.50. The reduced prices will be effective from midnight.
Arun Jaitley, while addressing the press in New Delhi, said that the Centre will cut Rs 1.50 in excise duty on fuel and the additional Re 1 will be absorbed by the oil marketing companies (OMCs).
Jaitley said that the cut on excise duty will cost Centre Rs 10,500 crore, which is only 0.05 percent of the fiscal deficit. “We are confident that we will able to absorb this burden with the help of increased collections,” he said.
Citing the reason for the surge in fuel prices he said, “The Brent oil since yesterday has crossed 86$ per barrel, 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 percent, which is also the highest ever. Now, both these developments have led to a situation where there is a significant impact across global markets that we have seen today.”
He also urged the state governments to reduce Value Added Tax (VAT) or service tax on fuel to further reduce the price by an equivalent amount.
“The states’ revenue increases because of increased crude oil prices and hence it is easier for the states to absorb Rs 2.50,” he said.
The government of Gujarat and Maharashtra were the first ones to announce a further Rs 2.50 cut in fuel prices following the finance minister announcement.
“Maharashtra Government also decided to give additional relief of Rs 2.5/litre on petrol to give total benefit of Rs 5/litre in the State of Maharashtra,” tweeted Devendra Fadnavis, Maharashtra Chief Minister.
Over 10 more states, Chhattisgarh, Jharkhand, Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Haryana, Assam and Tripura are among others, who have announced a cut such that the consumers will get a relief of Rs 5 per litre on fuel prices.