Economy

As BJP States Follow Centre in Cutting Fuel Prices, Kerala Refuses

As BJP States Follow Centre in Cutting Fuel Prices, Kerala Refuses

"The state government this evening announced matching cut of Rs 2.50 per litre in fuel prices commensurate with the price cut of Rs 2.50, announced by the central government earlier today", an official spokesman said.

"I hope all state governments do this, and they announce this so that consumers benefit by 5 rupees", Jaitley told reporters. Diesel prices in Chennai increased by 22 paise to Rs 79.79 a litre and by 20 paise to Rs 77.30 per litre in Kolkata.

While all other states effected the cut on both petrol and diesel, the Maharashtra government has slashed prices only on petrol and is considering a similar cut on diesel.

The price cut is likely to result in a loss of margin of 70-72 billion Indian rupees on auto fuel sales, according to K Ravichandran, senior vice president, corporate ratings, at ratings agency ICRA Ltd. But it is unclear how many of India's 29 states will meet the request, though some had in recent weeks already reduced their take.

However, very soon, the prices can be reduced by Rs 5 as well!

The TRS government in Telangana will be under pressure now to follow suit as not reducing Value-Added Tax after a central reduction in excise duty would lead opposition parties in the state to blame the state government during assembly election campaign.

Congress chief spokesperson Randeep Surjewala claimed it was a "panic reaction" by the government after facing public ire and an "imminent defeat" for the BJP in upcoming assembly elections in five states, and said the step will bring little relief to the people as it is like "reducing death sentence to life imprisonment".

More news: Cubs-Brewers Set For National League Tiebreaker

In September, the chief minister had announced a Rs 2 cut on petrol and diesel prices while the country was seeing daily increase in prices.

Jaitley said the total impact of Rs 1.50 cut in excise duty is about Rs 21,000 crore for full year and Rs 10,500 crore the reminder of current fiscal.

Finally, after an unhindered rally of fuel prices, the government has announced a tax-cut to compensate for the increase in crude prices.

Jaitley said the decision to give relief to consumers was necessitated by the uncertainty regarding the global oil prices and could be possible on account of better-than-expected revenue collections. However, India's domestic indicators are quite strong and stable.

"When the prices go up the Centre receives a fixed amount per litre, whereas the revenue of states go up".

"The Centre had hiked excise duty by ₹10 and reduced it by only ₹2.50".

Fuel prices have been consistently hitting record highs since mid-August. Brent, the benchmark for more than half the world's oil, is trading at a four-year high of over Dollars 84 per barrel.


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