As 10 States Follow Centre In Slashing Fuel Prices, Kerala Refuses

As 10 States Follow Centre In Slashing Fuel Prices, Kerala Refuses

Jaitley said he would write to state governments to also immediately cut the value added tax on petroleum products by Rs 2.5 so that consumers receive a benefit of Rs 5 per litre on fuel. Jaitley further said that the ruling party and oil firms will deal with the price reduction by Rs 1.50 and Rs 1 respectively. "This will be a test for all state governments, especially leaders who were only offering lip service earlier", Mr Jaitley pointedly remarked.

However, South Indian states such as Kerala, Karnataka and Andhra Pradesh say they can't cut their fuel taxes anytime soon.

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. In what was seen as a political challenge to the states ruled by opposition parties, the minister said while he would send a written appeal to the states, the decision would be theirs and the government will not interfere.

For state-owned fuel retailers absorbing Re 1 per litre price would mean about Rs 10,700 crore dent in their revenue on an annualised basis.

"Maharashtra government also chose to give additional relief of Rs 2.50 per litre on petrol to give a total benefit of Rs 5 per litre in the state of Maharashtra", Fadnavis tweeted. "This time if other state governments do not do it then people will ask them", he said.

The fuel prices had been going up every day for last few weeks, burning a hole in people's pockets.




Petrol, diesel prices across the country scaled new heights on Thursday, with diesel prices reaching Rs 80.10 per litre and petrol reaching Rs 91.34 per litre in Mumbai.

The minister also maintained that Thursday's decision did not represent a re-regulation of fuel prices.

Brent crossed $86 per barrel and this is the highest in the last four years. Neither the centre nor the states have the bandwidth to make any steep cut in excise duties and sales tax due to limited fiscal space available in an election year.

In a press briefing, Jaitley said that the Centre will cut Rs 1.50 in excise duty on fuel while an additional Re 1 will be absorbed by the Oil Marketing Companies (OMCs).

He also thanked Prime Minister Narendra Modi and Finance Minister Arun Jaitley for reducing the rates of petrol and diesel, saying this will give a huge relief to the common man.

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