India cuts gasoline, diesel prices to offset oil rise, rupee losses

NEW DELHI: India cut the retail prices of gasoline and diesel fuel by 2.50 rupees ($ 0.034) per litre, Finance Minister Arun Jaitley said, the government’s latest step to tackle a sharp hike in crude oil prices and the impact of a weak Indian rupee.

The cut is a result of a reduction in the excise duty of 1.50 rupees per litre with oil marketing companies taking a revenue hit of 1 rupee per litre, he said.

Jaitley also asked state governments to cut the value added tax on fuel by a further 2.50 rupees per litre.

“I hope all state governments do this, and they announce this so that consumers benefit by 5 rupees,” he told reporters.

The Nifty Energy Index fell 6.14 per cent lower on Thursday in reaction to the news.

Shares in Indian Oil Corp, the country’s biggest oil refiner, dropped 11.4 per cent.

Hindustan Petroleum Corp closed down 13.5 per cent while Bharat Petroleum Corp Ltd fell 12.4 per cent.

Reliance Industries shares closed down 6.9 per cent, their biggest single- day fall since Aug 24, 2015.

Taxes on gasoline and diesel, which account for more than a third of retail fuel prices, are one of the biggest sources of income for the government, and a sensitive issue for voters.

Modi’s ruling party is facing a tough election in three key states this year followed by a national election due by May. — Reuters