India's government has introduced a fuel relief as prices at the pump rise inexorably, following soaring global benchmarks, Indian media report, citing the official statement by Finance Minister Arun Jaitley.
On Thursday, the price of petrol was raised by 15 paise a litre while that of diesel was hiked by 11 paise a litre.
Except for Mumbai, diesel prices are up by around 30 paise across the cities.
The State Government this evening announced a matching cut of Rs 2.50 in the fuel prices commensurate with the price slash of Rs 2.50, announced by the Central Government earlier today taking the total succor to Rs 5 per litre in J&K. Maharashtra announced an Rs 3.2 cut in petrol price, but a decision on diesel is still pending.
Reacting to Union Finance Minister Arun Jaitley's suggestion asking states to match the Centre's decision with a similar reduction in sales tax or VAT, State Finance Minister TM Thomas Isaac said it would adversely affect the state's revenue. Finance minister Shashi Bhusan Behera told the media that they will examine the request of Union finance minister Arun Jaitley to reduce Value-Added Tax.
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All the cuts will be effective from midnight, as clarified by Dr. Hasmukh Adhia, finance secretary. Gujarat government reduced petrol and diesel prices by Rs 2.50 per litre, while Maharashtra lowered petrol price by 2.50 per litre.
Jaitley said the impact of the excise duty cut on the Centre's revenues would be about Rs 21,000 crore in a full year and Rs 10,500 crore in the remainder of the current financial year.
► Tripura government has also slashed the prices of fuel. However, in Mumbai, the diesel have gone up by 7 paise only.
By lowering duties, the Narendra Modi government is borrowing a page from the rulebook of past governments that have lowered levies whenever worldwide oil prices shot up.
However, very soon, the prices can be reduced by Rs 5 as well! Any further revenue loss, however, could widen the fiscal deficit.