Late Saturday night union finance minister Nirmala Sitharaman made announced the excise cut and a ₹200 subsidy for those buying LPG cylinders under the Ujjwala Yojana scheme.
She said revised fuel prices would ‘give relief to the common man’ in the face of rising prices of petrol and diesel, as well as cooking oil, food grains, vegetables, and other essential goods. The news was welcomed by prime minister Narendra Modi – who said ‘it is people first’ for his government – but received with skepticism by some others.
States’ response to petrol, diesel excise cuts:
Maharashtra on Sunday announced a reduction in VAT on petrol and diesel by ₹2.08 per litre and ₹1.44 per lite. This reduction will be implemented with immediate effect, said a statement from the Uddhav Thackeray government.
The Karnataka government ‘will consider’ further reductions in petrol and diesel prices in the state, chief minister Basavaraj Bommai said Sunday, a day after the centre slashed additional excise duty on both by ₹8 and ₹6 per litre, respectively. “The (centre’s) decision has come on Saturday night… let’s see, we will consider it,” Bommai told reporters in Bengaluru as he was leaving to attend the World Economic Forum at Davos.
The chief minister – expected to lead the BJP in next year’s assembly election – pointed out in November 2021 Karnataka cut sales tax on petrol and diesel, reducing by ₹13.30 per litre and diesel by ₹19.47 per litre.
In Tamil Nadu – where the DMK and its ally, the Congress – are in power finance minister Palanivel Thiaga Rajan pointed out Saturday’s excise duty cuts had only partially offset multiple price increases over the last two years.
“Exorbitant increase in taxes by Union Government only partially reduced through cuts… taxes continue to be high compared to 2014. Therefore, it is neither fair nor reasonable to expect States to reduce their taxes,” he said.
He did, however, say it was ‘heartening’ that the centre had ‘finally heeded’ repeated requests to reduce taxes. Like Bommai he pointed out that in August 2021 the state cut petrol prices by ₹3 per litre.
Tamil Nadu’s main opposition party – the AIADMK, which is a BJP ally – has reminded the ruling DMK of its poll promise to reduce fuel prices.
Kerala has ruled out VAT cuts but prices will still drop due to the centre’s cut – by ₹2.41 per litre for petrol and ₹1.36 for diesel.
Rajasthan has done so; chief minister Ashok Gehlot has said the Congress-ruled state will reduce VAT. “… petrol will be cheaper by ₹10.48 and diesel by ₹7.16 per litre in the state,” he tweeted.
From 6 am fuel prices in Odisha dropped by ₹2.23 per litre for petrol and ₹1.36 per litre for diesel as a result of the centre’s cuts; VAT has not been reduced. Petrol now costs ₹102.25 per litre and diesel ₹94.86 per litre.
Amar Patnaik, a MP from the ruling BJD, indicated VAT had not yet been cut because of the ‘limited scope’ for revenue collection, but said the Biju Patnaik government is nevertheless exploring options.
Petrol and diesel in Madhya Pradesh capital Bhopal have come down to ₹108.63 and ₹93.88 per litre, respectively. This cut is based on reduced centeal excise duty and not VAT. Prices may vary across the rest of the state by up to ₹3. Station owners have warned of losses over lack of relief for existing stock.
The state has thanked the centre for the rate cut, but the opposition Congress has demanded reductions by ₹20 and ₹26 per litre for petrol and diesel, arguing that central excise duty be brought down to 2014 levels.
In Goa petrol will now cost ₹97.17 per litre and diesel will cost ₹89.74 per litre after the centre cut excise, an industry stakeholder told PTI. Sources said no cuts in VAT are likely now since doing so ‘might hurt the economy’.
In Uttar Pradesh, opposition leader and Bahujan Samaj Party chief Mayawati has called on the Yogi Adityanath government to announce a cut in VAT as well, saying ‘it is the responsibility’ of the state to do so’.
Jharkhand BJP chief and Rajya Sabha MP Deepak Prakash has called on chief minister Hemant Soren to reduce VAT on petroleum products. Prakash accused the state government of politicising the issue.
Assam has reduced prices to ₹96.01 per litre for petrol and ₹83.94 per litre for diesel, chief minister Himanta Biswa Sarma tweeted, declaring it to be the lowest in the country. The reduction is based on excise duty cut only.
