Published: Sat, October 06, 2018
Business | By Eloise Houston

‘Panic reaction ahead of elections,’ says Congress after fuel price cut

‘Panic reaction ahead of elections,’ says Congress after fuel price cut

India's government has introduced a fuel relief as prices at the pump rise inexorably, following soaring worldwide benchmarks, Indian media report, citing the official statement by Finance Minister Arun Jaitley. A high-level meeting convened by the Prime Minister Narendra Modi has chose to reduce the Excise Duty by 1.50 Rupees.

Jaitley also asked state governments to cut value added tax on fuel by a further 2.50 rupees per litre.

So much for good governance?

Pune: Petrol Rs 86.76 per litre; diesel Rs 76.06 per litre. He also said he would write to all the states to cut their respective taxes. Oil prices were on freeze for 19 days during the Karnataka Assembly polls in May this year despite a spike in global crude prices. Worldwide crude oil prices are linked to geopolity, fluctuation in the exchange rate as well as the tax structure of respective states and the Centre. Top sources said that the state government is also considering a reduction in the prices of diesel. Oil marketing companies, simultaneously, will take a Re 1 per litre hit as well.

Yet now that the higher oil prices have combined with a falling rupee after the latest quarterly economic growth figures turned out disappointing, with the deficit widening, India is facing a serious challenge in sustaining its growth while reducing the adverse impact of the latest oil market developments.

This reduction in petrol prices was needed, as Maharashtra recently breached Rs 90 per litre mark, and speculations were rife that the price of petrol will soon touch Rs 100. The governments of Maharashtra, Gujarat, Chhattisgarh, Jharkhand and Uttar Pradesh - all under the rule of the Bharatiya Janata Party - have already said they will do so.

Union Finance Minister Arun Jaitley was speaking at the Hindustan Times Leadership Summit 2018 in the national capital.

The cuts will cost the Centre Rs 10,500 crore in tax revenues, he said. Jaitley expressed confidence in maintaining the fiscal deficit target for the current financial year despite the reductions. "We have to strike a fine balance among all aspects", Pradhan said in an interview to the magazine in June this year.

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