The first aspect of this plan involves the government cutting excise duty by Rs 1.5 per litre of petrol and diesel. BJP-ruled Gujarat, Tripura and Chhattisgarh governments have also announced a similar reduction in oil prices.
Union Finance Minister Arun Jaitley today offered relief to the people from the skyrocketing oil prices by slashing oil duty by Rs. 1.50.
"Reciprocating positively to FM's announcement, the Govt Of Gujarat has also chose to reduce Rs 2.50 on both petrol & diesel".
The chief minister of Maharashtra thanked the Prime Minister Narendra Modi and Finance Minister Arun Jaitley for reducing the rates of petrol and diesel, saying this will give a huge relief to the common man.
Jaitley, however, downplayed fiscal implications around the fuel price cut.
"The impact will be about Rs 21,000 crore for the full fiscal". Jaitley said it will be a test for those states whose leaders were only tweeting and indulging in lip sympathy.
In the press conference, Jaitley said that he expects to see a negative revenue impact of Rs 10,500 crore as a result of the tax cuts and said that he expected that the government would be able to absorb the impact without harming its fiscal deficit target of 3.3%.
The minister recalled that the central government had reduced taxes on fuel last October by Rs 2 and only states ruled by the BJP-led NDA coalition had announced matching cut in state taxes.
They follow in the footsteps of at least five other states which have cut value-added taxes over the last month.
Inflation in India, however, is still moderate at less than 4 per cent and higher direct tax collections give comfort with regard to fiscal deficit, he said adding domestic macroeconomic indicators are strong and stable, except for current account deficit.
Global oil prices have risen to four-year highs above $85 a barrel on fears of a global supply crunch, prompting US President Donald Trump to repeatedly demand the Organization of Petroleum Exporting Countries to lower prices.