Since August 16, petrol prices have risen to reach a record high.
New Delhi: Union Finance Minister Arun Jaitley today offered relief to the people from the skyrocketing oil prices by slashing oil duty by Rs. 1.50. The oil marketing companies will cut prices by another Rs 1 - a first since fuel prices were deregulated. The minister has appealed to the states to match the cut, so prices will come down by Rs 5. The Congress called it "band aid" treatment. Petrol prices have touched Rs 84 in Delhi and crossed Rs 91 in Mumbai. Diesel has touched an all-time high of Rs 80 in Mumbai and Rs 79 in Chennai.
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"We have taken this step because international oil prices are very uncertain. It is not at all sure what will happen in Iran," Mr Jaitley said, referring to the US sanctions, which the government maintains, have led to the rise in prices of crude oil.
In a pointed remark aimed at opposition parties, Mr Jaitley said, "Let the states decide (about fuel price cut). I won't interfere. But this will be a test for all the state governments, especially the leaders who were only offering a lip service earlier."
Petrol price in Mumbai has touched an unprecedented Rs 91.34 and diesel Rs 80.1. In Delhi, petrol is selling at Rs 84 and diesel at Rs 75.45. In Kolkata, petrol is at Rs 84.68 and diesel at Rs 75.97. in Chennai, petrol is at Rs 87.33 and diesel at Rs 79.79.
The Congress scoffed at the government measure, saying it was a "panic reaction" in view of the people's anger ahead of the elections. "After inflicting 1000 wounds, it is an attempt to put a band aid... We dare them to bring the prices back to what the fuel prices were in 2014," said senior Congress leader Randeep Surjewala.
BJP-ruled Uttar Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Chhattisgarh, Assam, Uttarakhand, Himachal Pradesh and Tripura have already announced price cuts for diesel and petrol. Jharkhand has reduced price of diesel. There has been no word from the opposition-ruled states.
The Congress said it did not need advice about reduction of petroleum prices. "We already started reducing prices in the run up to Bharat Bandh... After Bharat Bandh, TDP, Trinamool governments reduced the fuel prices on their own and our governments are actively considering reduction," Mr Surjewala said.
As fuel prices started spiraling earlier this year, opposition leaders relentlessly criticized the government for failing to check it. In September, more than 20 opposition parties lent support to a nationwide strike led by the Congress.
Oil prices are tied to the cost of crude oil in international market. Retail prices are set after the Centre and the states add substantial excise duty. A reduction can happen only if either excise duty is reduced -- in which case the Centre and state governments bear the loss. Else the loss can be passed on to oil firms.
The rupee, on Thursday, opened at a fresh record low of 73.76 per US dollar, heavily impacting the market.
Since August, the opposition and various industry bodies have been demanding that fuel excise duties be reduced. But cutting on excise duties means revenue loss for the government. The other option is to ask the oil companies to bear the loss.