"The government has always remained positive on the issue of reducing fuel prices". The Finance Minister had also urged the state governments to cut the Value-Added Tax on fuel by an equal amount. The governments of Maharashtra, Gujarat, Chhattisgarh, Jharkhand and Uttar Pradesh - all under the rule of the Bharatiya Janata Party - have already said they will do so.
Price cut in states like Gujarat and Maharashtra would be Rs 5 after they matched the announcement with a similar reduction in local sales tax or VAT rates. "Maharashtra Government also chose to give additional relief of Rs 2.5/litre on Petrol to give total benefit of Rs 5/litre in the State of Maharashtra", Fadnavis tweeted.
Meanwhile, Maharashtra, Gujarat Government also made a decision to give additional relief of ₹2.5/litre on Petrol to give total benefit of ₹5/litre in the State.
While the decisions by the BJP-ruled states was expected, there was also a near immediate refusal by non-BJP states to cut fuel rates.
The finance minister said that the impact of excise duty cut this year will be Rs 10,500 crore. PM Modi consulted Union Finance Minister Arun Jaitley and Oil Minister Dharmendra Pradhan.
India's currency falls to all-time low against US dollar
The rupee Monday tumbled 43 paise to end at a two-week low of 72.91 against the United States dollar on steady capital outflows. Brent crude breached $86 per barrel level, near its four-year high, on Wednesday.
Additionally, oil companies are to be asked to absorb another Re 1 per litre.
"The Brent oil since yesterday has crossed 86$/bbl which is the highest in the last four years". And within minutes, a number of states began to announce their decision to give citizens additional relief of Rs 2.50, bringing the total fuel price cut in these states to Rs 5.
Finance Minister Arun Jaitley announced a cut of R s 2.50 percent in fuel prices. Petrol rates increased by Rs 0.15 per litre and diesel rates increased by Rs 0.20 per litre on Thursday.
India is the third largest importer of crude oil and rising worldwide oil prices are inflating domestic transport fuel costs in a strong demand environment.
"I am confident we'll be able to maintain the fiscal deficit even after absorbing this", the minister said.