Interestingly, among the NE states, Assam levies the highest VAT- 30.90 pct on petrol and 22.79 pct on diesel. In Mumbai, petrol rates had breached Rs 90 per litre.
This reduction in petrol prices was needed, as Maharashtra recently breached Rs 90 per litre mark, and speculations were rife that the price of petrol will soon touch Rs 100. The price of crude oil, which makes up nearly 90% of oil imports, is a major factor behind the final price of petrol and diesel in the country.
The price of diesel in Delhi and Mumbai today (Oct 5) was Rs 72.95 and Rs 77.45 per litre, respectively.
The government Thursday announced a Rs 2.50 a litre cut in petrol and diesel prices, factoring in excise duty reduction of Rs 1.50 per litre and asking oil companies to absorb another 1 rupee per litre.
Congress chief spokesperson Randeep Surjewala claimed it was a "panic reaction" by the government after facing public ire and an "imminent defeat" for the BJP in upcoming assembly elections in five states, and said the step will bring little relief to the people as it is like "reducing death sentence to life imprisonment".
On May 26, 2014, the price of crude oil (Indian Basket) was $108.05 per barrel in the global market.
Finance Minister Arun Jaitley, who made the announcement, pegged the excise duty cut impact at Rs 10,500 crore. Some 12 BJP-ruled states, including Haryana, Uttar Pradesh, Assam and Gujarat, apart from poll-bound MP and Chhattisgarh, also reduced Value-Added Tax, which resulted into a reduction of the price of fuel in at least 12 states by Rs 5 a litre.
He also noted that the oil marketing companies are fully competent to deal with the decision and the government was not going back on fuel price deregulation.
However, South Indian states such as Kerala, Karnataka and Andhra Pradesh say they can't cut their fuel taxes anytime soon. So, a total of Rs.2.50 will be reduced on both diesel and petrol. Rising crude oil prices, and weakening of Rupee against the Dollar is seen as the major reason for this increase in price of petrol and diesel. But the hike in duties had helped the government more than double its excise collections from petro goods from Rs 99,184 crore in 2014-15 to Rs 229,019 crore in 2017-18.