Govt moves to douse fuel price fire with ₹2.5/L cut

FM lowers levies, 13 states follow call to reduce VAT; Cong terms it ‘bandaid’

As global oil prices hit near four-year highs and the rupee slipped to a new record low of 73.58 to the dollar, causing fuel prices to increase further, the National Democratic Alliance (NDA) government stepped in on Thursday to ease the pain of consumers, cutting petrol and diesel prices by ₹2.5 per litre and asking states to follow suit.

High fuel prices have hurt consumers across India and provided ammunition for opposition parties to target the government ahead of key state polls later this year and the 2019 parliamentary elections.

The cut was announced by finance minister Arun Jaitley in New Delhi. Explaining the composition of the cut, Jaitley said the excise duty on petrol and diesel will be lowered by ₹1.50 per litre and state-owned oil marketing companies will take a further cut of ₹1 per litre. He encouraged states to cut their value added tax (VAT) on fuel by ₹2.5. By late evening, at least 13 states agreed to do so.

While BJP-ruled Himachal and Haryana have announced to slash VAT on diesel and petrol by ₹2.5 per litre, effectively making both cheaper by ₹5, Congressruled Punjab has convened a meeting of officials of excise and taxation and finance departments on Friday to assess the implications and the impact of the Centre’s suggestion to states on reducing VAT. Jammu and Kashmir also slashed VAT on the fuel by ₹2.5 per litre.

BJP president Amit Shah said the decisions by the Centre and the states ruled by his party showed their sensitivity and commitment to people’s welfare. “BJP-ruled states are with the prime minister in this initiative and are always eager to provide any possible relief to the common man,” he said in a statement.

But the Congress hit out at the government over what it described as a “meagre” reduction, likening it to applying an adhesive bandage on a thousand wounds caused to the people. Congress spokesperson Randeep Surjewala also said it was a “panic reaction” by the government in the face of public ire.

West Bengal chief minister Mamata Banerjee’s Trinamool Congress demanded an at least ₹10 per litre cut. Aam Aadmi Party (AAP) leader and Delhi chief minister Arvind Kejriwal made a similar demand.

“Modi government raised excise duty on petrol by ₹10 and today reduced only ₹2.50. This is cheating. Centre should bring down petrol prices at least by ₹10,” Kejriwal said in a tweet in Hindi.

The Left parties said the Centre’s move was “too little and too late”, adding that it was like rubbing salt on the wounds of the common man.