Price cut in states like Gujarat and Maharashtra would be Rs 5 after they matched the announcement with a similar reduction in local sales tax or VAT rates.
Petrol and diesel will be five rupees cheaper per litre in various BJP-ruled states as they cut an additional Rs 2.5 on the fuels as Union finance minister Arun Jaitley Thursday announced a Rs 2.5 cut in per litre price on the fuels and asked states to make a matching reduction.
Bihar deputy chief minister Sushil Kumar Modi, who holds the finance portfolio, however told ANI that the state will take a decision after getting official intimation. In Delhi, where the fuel prices are the lowest among all metros and most of the state capitals, petrol is now sold at Rs 84 per litre and diesel at Rs 75.45.
"The impact will be about Rs 21,000 crore for the full fiscal".
State-owned oil firms had in mid-June last year dumped 15-year practice of revising rates on 1st and 16th of every month in favour of daily price revisions.
"A large number of worldwide factors, as I have repeatedly said, primarily the rising prices of Brent crude and also the domestic measures taken in the USA in terms of policy and raising of interest rates, has a significant impact across the world", Jaitley said. Jaitley said it will be a test for those states whose leaders were only tweeting and indulging in lip sympathy.
"The states' revenue increases because of increased crude oil prices and hence it is easier for the states to absorb Rs 2.50", he said.
The move by the central and state governments will cost the exchequer a significant amount but will provide relief for consumers.
"The government's aim is to give relief to the consumer by increasing their purchasing power without impacting the fiscal deficit", he said.
"Last time it were only the NDA ruled states, which made the Value-Added Tax reductions after the Rs 2 excise cut by the Centre previous year", he said.
Brent crude oil hit $86 per barrel on Wednesday, recording its highest level in 4 years.