Centre slashes Petrol, Diesel prices by Rs 2.5/Litre, urges States to follow suit

Major relief for consumers as trend in rising prices halted

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New Delhi: Finance Minister Arun Jaitley announced on Thursday that the Central Government had reduced excise duty on oil imports, leading to a reduction of Rs 2.5 per litre in the prices of both Petrol and Diesel. The move comes amid rising global oil prices and stiff criticism from opposition leaders.

The average price of Petrol in Delhi, which has the lowest price among all metro cities and most state capitals, was Rs 82.18 per litre in the month of September. Prices came down from Rs 84.06 per litre to Rs 81.56 after the Centre’s decision to reduce excise duty. The Finance Minister urged State governments to follow suit and reduce VAT so as to reduce prices by a further Rs 2.5 per litre, thus taking the overall reduction to Rs 5 per litre.

Maharashtra and Gujarat were the first to act in accordance with the Centre’s request, after both CM Devendra Fadnavis and CM Vijay Rupani announced the slashing of prices by a further Rs 2.5 litre on both Petrol and Diesel.

The BJP ruled states of Haryana, Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Assam, Jammu and Kashmir, Uttarakhand, Tripura, Goa, Chhattisgarh and Jharkhand later joined Gujarat and Maharashtra in complying with the Centre’s request to reduce VAT. So far, Kerala and Karnataka have seemingly ignored the Centre’s request, while West Bengal Chief Minister Mamata Banerjee has demanded that prices be reduced by a further Rs 10 per litre, with no statement regarding their intent to reduce state VAT.

The move comes as a big relief to consumers, with oil prices sky rocketing among a global spike in the price of oil barrels following OPEC’s decision to limit oil production. Saudi Arabia and Russia have only recently increased oil production marginally, which isn’t enough to reverse the trend set by the harsh US sanctions on Iran. This is a tricky situation for India, considering that Iran is the largest supplier of oil to India. The United States has warned of economic sanctions against nations dealing with Iran, but India has so far refused to budge. India is Iran’s second largest oil importer after China and the third largest oil importer in the world. So far, US officials have suggested giving special waivers for India to let them continue purchasing oil from Iran, given India’s heavy dependency on oil imports and the strengthening relationship between India and the United States.

The new series of US sanctions on Iran will be effective from November 4th, and Indian officials have suggested reverting back to payments in Rupees to find an alternate route to buying Iranian crude oil. UCO Bank and IDBI Bank have been identified to route the payment as the two have no exposure to the US financial system.

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