New Delhi: The Central government Thursday reduced petrol and diesel prices by `2.50 a litre with immediate effect. Excise duty on the fuels has been cut by `1.50 per litre, while the remaining Re 1 per litre is being forgone by oil marketing companies, Union Finance Minister Arun Jaitley said.
Jaitley said he would also write to state governments to reduce value added tax on petroleum products by `2.50 as well so that people benefit by `5 a litre on fuel.
“Fuel prices can be reduced by `5 a litre if states cooperate. If crude price increases from $65 to $80, states stand to benefit by 29 per cent on VAT. It increases their revenue share while the share of the Centre remains stagnant. So they can reduce VAT from their increased revenue,” he added. Jaitley said the excise duty cut would reduce the Centre’s revenue by `10,500 crore this fiscal. He said macroeconomic data, barring for current account deficit, are indicating stability. Inflation was still below 4 per cent. The government also remains committed to 3.3 per cent fiscal deficit target.
“The central government has to take decisions without affecting fiscal deficit,” the minister said.
STATE EXAMINES OPTIONS: The Odisha government Thursday said it will look into the Central government’s request to states to provide additional relief on fuel prices.
“We are examining the appeal made by the Union Finance Minister with regard to providing relief to the people on fuel price,” Odisha Finance minister S B Behera told reporters here.
“The tax imposed on petrol and diesel varies from state to state. Maharashtra, for instance, is collecting `9 per litre as cess in addition to the 26 per cent VAT. We need to examine the matter before we take further steps,” Behera added.
According to norms, the price of petrol and diesel in Odisha will be reduced by 65 paise per litre in addition to the Centre’s tax cut. In that case, customers in Odisha will get relief of `3.15 per litre on petrol and diesel.
