New Delhi: The government today announced Rs 2.50 per litre cut in the retail prices of petrol and diesel. This includes excise duty cut of Rs 1.50 on the two fuels and an additional Re 1 cut to be borne by oil firms. Finance minister Arun Jaitley made the announcement after holding discussions with the revenue department and the petroleum ministry today.
Jaitley said the Oil Marketing Companies have been instructed to bear Rs 1 per litre of the cut, while the revenue department was expected to bear Rs 1.50 per litre of the cut. The reduction in prices will take effect from tomorrow.
Jaitley added the government was expected to take a hit of Rs 10,500 crore due to the excise duty cut in the current financial year, which would account for 0.05 per cent of the fiscal deficit.
Fuel prices across the country have been recording new highs due to surging crude oil prices and a depreciating rupee against the US dollar. Crude oil prices reached four-year high of $86 per barrel this week.
Jaitley said that the central government expected the state governments to cut value-added tax on petrol and diesel by Rs 2.50 per liter as well to provide an overall relief of Rs 5 per litre on the both the fuels to consumers.
He also said the government is working on certain initiatives to control the decline of the Rupee, the benefits of which would further help in reducing fuel prices.