Fuel Prices: Center Finally Responds To Common Man’s Plight

Alicia Cross
October 5, 2018

Sources said the Centre has also urged the State governments to slash taxes on petrol and diesel which will is likely to further reduce the prices by at least Rs 5 per litre.

Announcing the decision, Finance Minister Arun Jaitley asked the state governments to match the move with a similar reduction in sales tax or VAT.

The Finance Minister said, however, that the higher oil prices were not the only factor that prompted the decision: India was also getting hit by higher US interest rates, although he added that only the country's current account deficit was swelling under the twin pressure of prices and rates, while the national fiscal deficit was enjoying the positive effects from direct tax collection rates.

Notably, petrol prices increased by at least Rs. 25/litre this year, ten times the reduction announced by Jaitely.

The Finance Minister said, the prices of crude oil and domestic developments in the USA have impacted the economies across the world.

"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.

"Excise duty to be reduced by Rs 1.50 & OMCs will absorb Rs 1". Since August 2018, the states of Karnataka, Rajasthan, Andhra Pradesh, West Bengal and Kerala cut fuel prices by anywhere between Re 1 to Rs 2.

The Modi government's policy of high oil taxes has become a source of political debate over the last month, with surging global oil prices no longer providing the Centre with a cushion to defend itself with.

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BJP president Amit Shah congratulated all the BJP-ruled states for slashing the fuel prices.

Ahmedabad and Mumbai are two cities where diesel prices have crossed Rs 80 per litre.

"It will be clear after this, which States mean what they write and actually implement the Value-Added Tax cut", Mr. Jaitley said. Also, the rupee dropped to its lowest ever level of 73.77 against the dollar, resulting in expensive crude imports.

Diesel is being sold at Rs 75.45 per litre in New Delhi, Rs 79.79 per litre in Chennai and Rs 77.30 per litre in Kolkata.

"Since May 2014, Modi Government has fleeced and duped the common people by draconian taxation of Rs 13 lakh crore".

"I am confident we'll be able to maintain the fiscal deficit even after absorbing this", the minister 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".

Other reports by Free-Prsite

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