- Rs 1.50 excise duty cut announced on both petrol and diesel
- Rs 1 price cut to be absorbed by oil marketing companies
- State governments urged to reduce prices by reducing local taxation
Finally, after an unhindered rally of fuel prices, the government has announced a tax-cut to compensate for the increase in crude prices. Since petroleum prices have been de-regularised, increase in global crude prices result in an immediate increased in local prices.
The central government had incrementally taxed the fuels when the global crude prices had hit an all-time low to generate revenues for the state in order to rein in the fiscal deficit. Now that the global crude prices are going up, following the American volatility and Iran sanctions, the local prices in India have soared to untenable heights, creating a general furore amongst the masses.
The central government has reduced the excise duty by Rs 1.50 while the state-owned oil marketing companies have been directed to absorb another rupee of price cuts. Central minister Arun Jaitley has also urged state governments to cut down state-VAT to reduce petrol prices further by about Rs 2.5. This will reduce the overall price by about Rs 5. But with the crude prices expected to increase further, the joy might turn out to be short-lived.