India lowers petrol, diesel prices by Rs 2.5 per litre

Millions of Indian commuters heaved a sigh of relief as the federal government brought down fuel prices by Rs 2.50 a litre each on Thursday.

The decision came a day after Brent crude oil touched $86 a barrel and US interest rates reached a seven-year high.

The government announced an excise duty cut of Rs 1.50 a litre for petrol and diesel and directed oil companies to absorb another Re 1 per litre.

State governments have been told to follow suit and cut sales tax or VAT by a similar amount.

BJP-ruled states like Maharashtra, Gujarat, Jharkhand and Uttar Pradesh lowered oil prices but states ruled by anti-BJP parties like Kerala, Karnataka, West Bengal, Punjab and Odisha refused to follow the  federal directive.

Finance Minister Arun Jaitley said this will be a test for all state governments, especially leaders who were only offering lip service earlier.

Opposition parties at their wits’ end as they want to play politics over the oil price move without being seen as anti-people. All along, they have been calling for cut in oil prices.

While lowering fuel prices, the federal government is taking a fiscal hit as the excise duty cut would have an impact on Rs 105 billion tax revenues, Jaitley said.

Inflation in India still stands at less than 4 per cent.