The BJP President said that he had a telephonic conversation with the Chief Ministers of all the BJP ruled states and they will give additional relief of Rs 2.50 per litre to the people by reducing Value-Added Tax. He said that Rs 10,500 crore will be the impact of the excise duty cut this year.
The Gujarat government also announced reduction of petrol and diesel prices by Rs 2.50 per litre.
"It certainly has fiscal implications".
Surjewala said the government must also answer to the people for hiking central excise duty on 12 occasions, raising the central excise on petrol by 211 pc and on diesel by 443 pc. Several other states later announced a similar move. The Nifty Energy Index fell 6.14 percent.
People get their two-wheelers filled with petrol at a fuel station in Ahmedabad, India, May 14, 2018.
The Finance Minister said, the prices of crude oil and domestic developments in the U.S. have impacted the economies across the world. But analysts said the announcement on Thursday shows there is still a heavy government hand in the industry.
Additionally, oil companies are to be asked to absorb another Re 1 per litre.
Jaitley also said the revenue impact of the decision would amount to around Rs 10,500 crore for the rest of the fiscal, which amounts to "only 0.05 per cent of the fiscal deficit".
Since the government came to power in May 2014, it has used tax increases on petrol and diesel prices to raise funds for welfare programmes.
In another tweet, Fadnavis announced that the state government will heed the government's request and cut the price of petrol by Rs 2.5 per litre, bringing the total benefit for end consumers to Rs 5 per litre in the state. Fuel prices are not uniform across the country due to variable state taxes. Together, these price reductions would add up to Rs 2.50 a litre - a significant relief at a time when rising fuel prices have been a cause for concern among the common man.
The decision was taken at an inter-ministerial meeting of the finance and the petroleum ministries.
"Reciprocating positively to FM's announcement", Gujarat also made a decision to cut the tax on petrol and diesel.