Centre announces ₹2.5 cut in fuel prices, urges States to match it

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The state governments in Maharashtra, Gujarat, Chhattisgarh, Jharkhand and Tripura today reduced the prices of petrol and diesel by Rs 2.5 soon after the Finance Minister Arun Jaitley announced a similar cut in fuel prices.

He also asked the states to match the cut announced by the states to give further relief to the masses and Gujarat and Maharashtra immediately followed suit.

Kerala Finance Minister Thomas Isaac however, said his government would not cut fuel prices, News18 reported.

The Centre has chose to cut excise duty on petrol and diesel by Rs 2.50 per litre with immediate effect, Finance Minister Arun Jaitley said on Thursday. "So, a total of Rs 2.50 will be reduced on both diesel and petrol", said Jaitely. He also said he would write to all the states to cut their respective taxes. Kerala was one of the first states to cut excise duty.

Bihar deputy chief minister Sushil Kumar Modi, who holds the finance portfolio, however told ANI that the state will take a decision after getting official intimation.

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India is the third largest importer of crude oil and rising global oil prices are inflating domestic transport fuel costs in a strong demand environment.

He insisted that telling oil marketing companies to absorb Re 1 didn't imply going back on deregulation of prices. In Delhi, where the fuel prices are the lowest among all metros and most of the state capitals, petrol is now sold at Rs 84 per litre and diesel at Rs 75.45. "Consequently, we are hoping for a Rs 5 per litre reduction", the finance minister said.

Jaitley said the move followed Brent crude oil touching four-year high of Dollars 86 a barrel Wednesday and interest rates in United States reaching seven-year high. Last month, Rajasthan, Karnataka and Andhra Pradesh had reduced Value-Added Tax to cushion consumers for a spate of price increases.

In Mumbai, petrol is being retailed at Rs 91.32 a litre and diesel at Rs 80.10 per litre after being hiked by 14 paise and 21 paise, respectively. Jaitley expressed confidence in maintaining the fiscal deficit target for the current financial year despite the reductions. On OMCs absorbing Re 1, he said they would adjust it over present and future prices.