Diesel cheaper by Rs 4.06

Shares of oil marketing companies fell after finance minister Arun Jaitley said that the government has asked the companies to absorb Rs 1 cut on fuel prices

Shares of oil marketing companies fell after finance minister Arun Jaitley said that the government has asked the companies to absorb Rs 1 cut on fuel prices

The price cut would be effective from midnight tonight.

Since April this year, prices of petrol and diesel has witnessed a steep upswing, baffling consumers all over the country.

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

The decision was announced by finance minister Arun Jaitley after he held a closed-door meeting with Prime Minister Narendra Modi and petroleum minister Dharmendra Pradhan. "Apart from tax reduction in oil companies, if we also include a cut in other taxes, there would be an overall reduction of Rs 3 on fuel", dealers said.

It had resisted the call for a reduction in excise duty since May when retail rates first shot up and then again from mid-August when fuel prices started moving up.

Government officials had also claimed that Rs 2 per litre reduction would impact revenues by Rs 28,000 to Rs 30,000 crore.

The consumers will get a benefit of Rs. 2.50, said finance minister Arun Jaitley while announcing the decision.

The state of Karnataka, who earlier slashed fuel prices by Rs 2, will not be announcing any more cuts.

"And reducing oil prices, if you say is good politics, so be it", said Mr Jaitley. Hence, petrol and diesel prices in Tripura too has reduced by Rs 5 per liter.

Jaitley, however, said asking oil companies to bear a part some burden is not going back on deregulation. Earlier, Rajasthan, Karnataka, Andhra Pradesh, and West Bengal had also announced cut in Value-Added Tax amid rising fuel prices. Of this, IOC's share would be roughly half and the rest split equally between HPCL and BPCL.

India stopped controlling petrol prices in 2010 and diesel prices in 2014, linking them to global crude markets in a bid to ease pressure on government finances and improve the earnings of oil refiners. A 13 percent depreciation in the Indian rupee had only made fuel imports costlier.

Nearly half of the fuel price is made up of taxes. This means that petrol will continue to be expensive in Delhi.

India's current account deficit in the June 2018 quarter rose to a four-year high of 2.4% of GDP, or $14.3 billion, which has put further pressure on an already weakening rupee. Any further revenue loss, however, could widen the fiscal deficit.

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