Mumbai, for instance, saw the price of petrol cross the Rs 90/litre barrier while the cost of diesel had also breached the Rs 80/litre mark. Yesterday, media reported that the Modi government had allowed local companies affected by the rise in oil prices to borrow internationally up to US$10 billion.
► Gujarat CM Vijay Rupani said: "Finance Minister Sh @arunjaitley Ji has announced Rs.2.5 cuts in petrol & diesel prices, reciprocating positively to FM's announcement, the Govt Of Gujarat has also chose to reduce Rs.2.50 on both petrol & diesel".
In a significant decision which would give major relief to the people, the Petrol and Diesel prices in Jammu and Kashmir have been slashed by Rs 5 per litre.
Maharashtra, Gujarat and the other BJP ruled states were quick to hear him.
Just last month, the Centre had said that it had no intention to cut excise duties on petrol and diesel and jeopardise its tax revenues. But growing public anger over surging fuel prices has caught the attention of the government.
Speaking on the reason for price cut, the Finance Minister said that there has been a significant impact of higher interest rates in the United States and crude oil prices on rising fuel prices in the country. As a measure to curb the growing menace, the government has finally stepped in by trimming down the excise duty on fuel prices to bring in relief to the end users.
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The Maharashtra government on Friday announced a relief of Rs1.56/litre on diesel prices.
Finance Minister Arun Jaitley urged states to match the cut with an equivalent reduction in the value-added tax. The Gujarat Chief Minister tweeted that it has matched the central government's reduction, and that petrol and diesel are now cheaper by Rs 5 per litre. In fact, in an interview to India Today, petroleum minister, Dharmendra Pradhan, explained how tweaking of tax rates by the government would not make much of a difference and how the Centre was negotiating with the states to reduce taxes. The effective reduction would be Rs 4.06 per litre.
States Respond; Price Reduced By Rs 5! Diesel prices in Chennai increased by 22 paise to Rs 79.79 a litre and by 20 paise to Rs 77.30 per litre in Kolkata. "So the impact will be Rs 10,500 crore in current fiscal which is only 0.05 per cent of fiscal deficit".
Expressing confidence in the robustness of Indian economy, the Finance Minister said the current situation was "short-lived" and won't last indefinitely.
On OMCs absorbing Re 1, he said they would adjust it over present and future prices.