Big decision by Modi government on fuel prices; announces Rs 2.5 per litre relief on petrol, diesel

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Updated: October 4, 2018 5:32:13 PM

In a big development, the Narendra Modi government on Thursday announced a total relief of Rs 2.5 per litre on petrol and diesel in collaboration with oil companies.

Big decision by Modi government on petrol prices; announces Rs 2.5 per litre relief on petrol, dieselBig decision by Modi government on petrol prices; announces Rs 2.5 per litre relief on petrol, diesel

In a big development, the Narendra Modi government on Thursday announced a total relief of Rs 2.5 per litre on petrol and diesel in collaboration with oil companies, Finance Minister Arun Jaitley told reporters. Arun Jaitley said that the government will cut excise duty by Rs 1.5 per litre on petrol and diesel, while oil marketing companies will absorb the loss of Rs 1 per litre.

Arun Jaitley also urged the states to provide relief on fuel prices in tandem with central government’s decision so that the consumer gets a total relief of Rs 5 per litre. The petrol price in some districts of Maharashtra and Bihar on Thursday breach Rs 92 a litre mark, while in Mumbai and Delhi it was Rs 91.34 a litre and Rs 84 a litre respectively.

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Arun Jaitley said that India is getting impacted by two major international developments: rise in crude oil prices and rate hike by the US Fed. He said that only the current account deficit (CAD) is under pressure, while the fiscal deficit is getting a lot of comfort due to higher-than-expected direct tax collections.

He expressed confidence that the impact of fuel relief will be mere 0.05% on state coffers and the government will be able to achieve the fiscal deficit target of 3.3% of the GDP.

Soon after government’s fuel relief decision, BJP-ruled states Maharashtra, Gujarat and Tripura also announced cut in Value Added Tax (VAT), while Kerala said that it may not do so as the state had already given relief some time back. Rajasthan, Andhra Pradesh, Telangana and West Bengal also announced tax cut on fuel prices recently.

This is the second excise duty cut announced by the government in one year as crude oil prices surged from $55 a barrel to $86 a barrel since September 2017. Last year, on October 3, the Narendra Modi government had announced an excise duty cut of Rs 2 a litre on petrol and diesel.

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