Karnataka Chief Minister HD Kumaraswamy today announced that his government is reducing the prices of petrol and diesel by Rs. 2. The decision comes at a time when the Centre is under attack from the opposition as the fuel prices are scaling new heights every day.
Petrol prices crossed Rs. 90 in at least 11 towns in Maharashtra today. Fuel prices are the highest in Maharashtra and the lowest in Andaman and Nicobar.
"Everyday fuel prices are increasing, people of Karnataka felt that the state government can reduced the prices of fuel by reducing the taxes, I want to announce from Kalburgi that the coalition government has decided to cut down the taxes for petrol and diesel minimum by Rs. 2. I hope this step taken by our coalition government will give some relief to the people of Karnataka," Mr Kumarasamy said in Kalaburagi.
The Vasundhara Raje government in Rajasthan too had announced tax cuts on petrol and diesel, which led to prices falling by Rs. 2 per litre.
A day later, Andhra Pradesh Chief Minister Chandrababu Naidu followed suit by announcing a cut in tax for fuel, which brought down the prices by Rs. 2 per litre and cost the exchequer around Rs. 1,120 crore.
Mamata Banerjee too cut fuel prices in West Bengal by Re. 1 per litre.
Earlier this month, 22 opposition parties - led by the Congress - held a nationwide strike or "Bharat Bandh" to protest the rising fuel prices and falling rupee.
Since oil prices have started rising, following US sanctions on Iraq and the slide of the rupee against the dollar, there have been calls to reduce tax.
Oil prices in the country are tied to the cost of crude oil in international market. But over it, both Centre and the states levy taxes. A reduction in retail prices can happen only if excise duty is reduced -- in which case the Centre and state governments bear the loss, or the oil firms bear it directly.