Economy

Jaitley lowers petrol, diesel prices by Rs 2.5 per litre

Jaitley lowers petrol, diesel prices by Rs 2.5 per litre

Price cut in states like Gujarat and Maharashtra would be Rs 5 after they matched the announcement with a similar reduction in local sales tax or VAT rates.

The centre had provided a marginal relief for the people from runaway fuel prices by reducing the oil duty by Rs 1.50 and another one rupee drop by oil marketing companies.

Uttar Pradesh also reduced the fuel price by Rs 2.5 per litre giving a relief to consumers.

The hike pushed petrol price in Delhi to an all-time high of Rs 84 per litre and diesel to Rs 75.45.

The Finance Minister said, the prices of crude oil and domestic developments in the U.S. have impacted the economies across the world.

When Congress demitted power in May 2014, central excise duty on petrol was merely Rs 9.23 per litre and the Modi government has raised it to Rs 19.48 per litre, he said, adding that in May 2014, excise duty on diesel was merely Rs 3.46/litre and the Modi government raised it to Rs 15.33/litre.

Asked by a reporter about the economic implications of the move, Jaitley said the decision was "good economics" as it won't impact the fiscal deficit and will allow consumers to boost spending on other goods.

Excise duty to be reduced by Rs.1.50 & OMCs will absorb 1 rupee.

The Modi government's policy of high oil taxes has become a source of political debate over the last month, with surging global oil prices no longer providing the Centre with a cushion to defend itself with.

While some states like Andhra Pradesh and Karnataka cut the fuel prices weeks ago by announcing a cut to the Value-Added Tax charged by the states, Tamil Nadu, Telangana and Kerala had maintained that it was up to the Central government to reduce the prices.

Brent crossed $86 per barrel and this is the highest in the last four years. In Mumbai, petrol rates had breached Rs 90 per litre.

For state-owned fuel retailers absorbing Re 1 per litre price would mean about Rs 10,700 crore dent in their revenue on an annualised basis. Also, the rupee dropped to its lowest ever level of 73.77 against the dollar, resulting in expensive crude imports. Diesel prices in Chennai increased by 22 paise to Rs 79.79 a litre and by 20 paise to Rs 77.30 per litre in Kolkata.

"The impact will be about Rs 21,000 crore for the full fiscal".

The Congress party said the move is like applying a band-aid after inflicting a thousand wounds on the people of the country.


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