Fuel prices on the boil again, diesel breaches Rs 80 in Mumbai

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"Maharashtra Government also made a decision to give additional relief of Rs 2.5/litre on Petrol to give total benefit of Rs 5/litre in the State of Maharashtra", Fadnavis tweeted.

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. What it did now is only an eyewash. If the Centre is serious, it should reduce the tax to what it was when it assumed office.

While some states like Andhra Pradesh and Karnataka cut the fuel prices weeks ago by announcing a cut to the Value-Added Tax charged by the states, Tamil Nadu, Telangana and Kerala had maintained that it was up to the Central government to reduce the prices. Only a few weeks ago, multiple media reports, quoting anonymous senior government officials, indicating that the government had no plans of cutting excise duty.

India stopped controlling petrol prices in 2010 and diesel prices in 2014, linking them to global crude markets in a bid to ease pressure on government finances and improve the earnings of oil refiners.

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Fuel prices across the country have been scaling new heights everyday on the back of sustained depreciation of the rupee against the dollar and crude prices trading around its four-year high of $86 per barrel. The prices of petrol are maximum across the state, soaring above Rs 91 in many districts of the state. "Thus petrol & diesel wd be Rs 5 cheaper in the State of Gujarat", Gujarat CM tweeted.

"I am confident we'll be able to maintain the fiscal deficit even after absorbing this", the minister said. Addressing a presser, Finance Minister Arun Jaitley stated that the decision will result in a revenue loss of Rs 10,500 crore in six months and urged states to effect a similar cut.

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".

"For oil security, we need strong OMCs. Therefore they would be in a position to absorb this", he said.