India is cutting prices of petrol and diesel by 2.50 rupees ($0.03) a litre, Finance Minister Arun Jaitley said on Thursday, the government's latest step to tackle the impact of a sharp rise in crude oil prices and a weak local currency.
Excise duty to be reduced by Rs.1.50 & OMCs will absorb 1 rupee.
The central government on October 5 cut the prices of petrol and diesel by Rs 2.50 per litre.
Kerala Finance Minister Thomas Isaac however, said his government would not cut fuel prices, News18 reported.
"Instead of asking the states to cut the levy by another Rs 2.50, the government should have effected meaningful reduction", it said.
Jaitley appealed to the states to match the Centre's effort by reducing value-added tax or VAT by Rs. 2.50 so that the total benefit to citizens is at least Rs. 5.
Jammu and Kashmir: Petrol and Diesel prices in Jammu and Kashmir have been slashed by Rs 5 per litre, the state government.
"We have authorised the oil marketing companies to raise $10 billion through foreign currency oil bonds", he added. But analysts said the announcement on Thursday shows there is still a heavy government hand in the industry.
The price cuts would be effective from midnight tonight.
In Kolkata, the petrol price was Rs 83.35 per litre while that of diesel was Rs 74.80 this morning. HPCL shares fell 14.7% to Rs 214.40, BPCL was down 17.08% at Rs 313 and Indian Oil dived 14.23% to Rs 134.95. As a measure to curb the growing menace, the government has finally stepped in by trimming down the excise duty on fuel prices to bring in relief to the end users. But with a weakening rupee, it will likely have fewer options in the form of import-related tax cuts.
The cuts will cost the Centre Rs 10,500 crore in tax revenues, he said.
The hike in duties had led to excise collections from petro goods more than doubling in last four years - from Rs 99,184 crore in 2014-15 to Rs 2,29,019 crore in 2017-18. Jaitley expressed confidence in maintaining the fiscal deficit target for the current financial year despite the reductions. "After the cut in petrol and diesel prices, let's pray to have elections every month or perhaps every week", one tweet said. Any further revenue loss, however, could widen the fiscal deficit.