Monday, 12 November, 2018

Jaitley lowers petrol, diesel prices by Rs 2.5 per litre

Centre reduces petrol price Congress calls it a'panic reaction before the upcoming election A petrol pump employee serves a customer at a fuel station
Nellie Chapman | 04 October, 2018, 15:58

Together, these price reductions would add up to Rs 2.50 a litre - a significant relief at a time when rising fuel prices have been a cause for concern among the common man.

Petrol and diesel will be five rupees cheaper per litre in various BJP-ruled states as they cut an additional Rs 2.5 on the fuels as Union finance minister Arun Jaitley Thursday announced a Rs 2.5 cut in per litre price on the fuels and asked states to make a matching reduction.

The reduction follows petrol and diesel prices soaring to new highs.

Jaitley said that in addition to excise duty being cut by Rs 1.5 per litre, oil marketing companies would also take a hit of Re 1 per litre as well.

This rapid tax escalation more than doubled its excise collections from petro goods in the last four years - from Rs 99,184 crore in 2014-15 to Rs 2,29,019 crore in 2017-18.

"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.

Jaitley also said the revenue impact of the decision would amount to around Rs 10,500 crore for the rest of the fiscal, which amounts to "only 0.05 per cent of the fiscal deficit". Jaitley said it will be a test for those states whose leaders were only tweeting and indulging in lip sympathy.

The move to ask state-owned oil firms, who were given pricing freedom, to absorb Re 1 per litre was seen as a return of government control over pricing, leading to stocks of Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) tanking.

Jaitley also said that the Finance Ministry is writing to the state governments to cut Rs 2.50 from the Value-Added Tax imposed on petrol and diesel prices.

Maharashtra, Gujarat and the other BJP ruled states were quick to hear him.

"The government's aim is to give relief to the consumer by increasing their purchasing power without impacting the fiscal deficit", he said.

On the bullish stock markets and weakening of Rupee, Jaitley blamed it on Brent crude touching a four-year high of $86 a barrel and interest rates in the USA reaching their highest level in seven years.