Soon after the Central government announced a cut of Rs 2.50 per litre on diesel and petrol today, all the Bharatiya Janata Party (BJP)-ruled states followed suit by slashing the fuel prices by another Rs 2.50 per litre.
Finance Minister Arun Jaitley on Thursday announced a cut of Rs 2.5 in the prices of both petrol and diesel. The move comes amid the petrol breaching the psychological mark of Rs 90 in Mumbai and Rs 84 in the national capital.
“Excise duty to be reduced by Rs 1.50 and OMCs will absorb 1 rupee. So, a total of Rs.2.50 will be reduced on both diesel and petrol,” said Finance Minister Arun Jaitley.
Jaitley also said that the Finance Ministry is writing to the state governments to cut Rs 2.50 from the VAT imposed on petrol and diesel prices.
Soon after the announcement, the NDA-led governments in 13 states — Uttar Pradesh, Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh, Tripura, Jharkhand, Assam, Arunachal Pradesh, Himachal Pradesh, Haryana, Uttarakhand and Goa — followed the Centre’s footsteps announcing a cut of Rs 2.50 per litre in fuel prices.
Jammu and Kashmir, which is currently under Governor’s rule, also announced a reduction of Rs 2.50 on fuel prices.
While eleven states announced cut in both petrol and diesel prices, the Maharashtra government announced a reduction of Rs 2.50 on petrol and said that a decision on diesel prices will be taken soon.
Petrol in Mumbai will now be available at Rs 86.34 per litre while in Ahmedabad, it will be available for Rs 78.21 per litre.
The relief to consumers will be in three parts — centre will cut excise duty by Rs 1.5, and oil marketing companies (OMCs) will factor in Re 1 in their pricing, and states have been asked to cut VAT as they have raked in windfall gains due to ad valorem nature of the levy that results in higher realisation whenever rates move up, the finance minister said.
“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.
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