Rajasthan Chief Minister Vasundhara Raje announced a four-per cent reduction in value-added tax (VAT) on petrol and diesel on Sunday, which will reduce their prices by Rs 2.5 per litre in the state.
VAT on petrol will be reduced from 30 to 26 per cent and on diesel from 22 to 18 per cent, Ms Raje announced at a public meeting organised in Rawatsar in Hanumangarh district as part of her 'Rajasthan Gaurav Yatra'.
The revised rates will be effective from midnight.
The decision will cost the exchequer Rs 2,000 crore and will provide the people a relief of Rs 2.5 per litre on petrol and diesel.
"We have decided to reduce VAT on diesel and petrol by 4 per cent, which will provide much-needed relief to the people of the state, be it farmers or women or others,"Ms Raje told reporters in Rawatsar after making the announcement.
Petrol and diesel prices set new records Sunday as they continued their upward march on fall in rupee and surge in global crude oil rates.
The Congress has called for a nationwide shutdown on Monday over rising fuel prices and depreciation of the rupee.
Targeting the Congress, the chief minister said that the party had failed to play the role of an effective opposition and came out of its shell just before the election. Assembly election in Rajasthan is scheduled for later this year.
Reacting on the decision, AICC general secretary and former chief minister Ashok Gehlot said that Ms Raje had to take the decision because of public support the Congress was gaining for Bharat Bandh on Monday.
"The chief minister had to reduce VAT on diesel and petrol because of the public support Congress was gaining for Bharat Bandh on Monday. The reduction is not enough and the relief should also be provided on gas cylinder without any further delay," Mr Gehlot said in a statement.
He said that the former Congress government led by him in the state had reduced Rs 25 per cylinder and looking at the prices of today, there should be a cut of at least Rs 100 on the gas cylinder.