New Delhi: The Centre has decided to cut excise duty on petrol and diesel by Rs 2.50 per litre with immediate effect, Finance Minister Arun Jaitley said on Thursday. Of the Rs 2.5 cut, the Centre will bear Rs 1.5 of the burden and oil marketing companies will take a hit of Re 1 per litre.
Jaitley lowers petrol, diesel prices by Rs 2.5 per litre
Jaitley said he would write to state governments to also immediately cut the value added tax on petroleum products by Rs 2.5 so that consumers receive a benefit of Rs 5 per litre on fuel.
Jaitley said he was confident of meeting the fiscal deficit target this year even though the Centre’s revenue would decline by Rs 10,500 crore in 2018-19 because of the excise duty cut on fuel.
Shares of oil marketing companies fell after finance minister Arun Jaitley said that the government has asked the companies to absorb Re 1 cut on fuel prices. HPCL shares fell 14.7% to Rs 214.40, BPCL was down 17.08% at Rs 313 and Indian Oil dived 14.23% to Rs 134.95.
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. While Saudi Arabia and Russia could pump more, traders continue to speculate whether OPEC and allied producers can offset a supply loss in Iran and declining production in Venezuela.