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Government reduces fuel price by Rs. 5

PUBLISHED:

Government has announced a relief of Rs. 2.50 on fuel prices to consumers. Announcing the decision, Finance Minister Arun Jaitley said that the Centre will cut Rs 1.50 in excise duty on fuel while an additional Re 1 will be absorbed by the Oil Marketing Companies.

He has also urged the State governments to cut the VAT on fuel by an equal amount. Jaitley said that the move will have an impact of Rs. 10,500 crore this fiscal but the government is confident of achieving the fiscal deficit target. The Central government charges Rs. 19.48 excise duty on a litre of petrol and Rs. 15.33 on diesel.

The Assam government has also announced their decision to reduce fuel price by Rs. 2.50, after Finance Minister asked the States to cut the VAT on fuel.

Minutes after Jaitley’s announcement, the Gujarat government also slashed Rs. 2.50 on petrol and diesel.

BJP-ruled Maharashtra also responded to the finance minister’s call to lower oil prices.

The finance minister added that the Central Government will not go back on deregulation of fuel prices. “We have to react to the situation and give relief without impacting fiscal deficit. We cannot do it at the cost of fiscal position and give it when it can absorb it,” he said.

Arun Jaitley’s announcement followed petrol and diesel prices touching a new high. Jaitley said crude oil touched four-year high of $86 a barrel on Wednesday and interest rates in the US have reached a seven-year high.

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