Rajasthan on Tuesday night reduced VAT on fuel prices, making petrol cheaper by Rs 4 per litre and diesel by Rs 5 per litre. The revised prices come into effect from midnight, Chief Minister Ashok Gehlot tweeted.
“Unanimous decision was taken in the cabinet meeting today to reduce the rate of VAT on petrol/diesel. After this, the rates will be reduced by Rs 4 per litre in petrol and Rs 5 per litre in diesel from 12 tonight,” the Chief Minister posted.
Rajasthan is now the second Congress-ruled state to cut VAT on petrol and diesel. Last week Punjab slashed petrol prices by Rs 10 per litre and cut diesel rates by Rs 5 per litre.
Ten days ago, Mr Gehlot had argued against further cuts to fuel prices, arguing that the centre’s November 4 reductions meant petrol had become cheaper by Rs 1.6 per litre and diesel by Rs 2.6 per litre. This, he said, would cause an annual loss of Rs 1,800 crore in revenue.
Fuel prices have skyrocketed over the past several months, with persistent tax hikes by the centre leaving petrol and diesel at over Rs 100 per litre in many cities and over Rs 110 in some.
Earlier this month – after battling widespread condemnation over fuel prices – the centre said excise duties would be reduced by Rs 5 per litre for petrol and Rs 10 per litre for diesel.
The cuts came a day before Diwali and was pitched as a “gift” for millions of people from the poorest and most deprived sections of society.
They also came before a number of crucial Assembly elections next year.
Predictably, Union Ministers and BJP leaders hailed the move, and 10 BJP-ruled states – Assam, Tripura, Manipur, Karnataka, Goa, Uttar Pradesh, Goa and Manipur – rushed to cut prices too.
Of these, four will hold elections next year – UP, Uttarakhand, Goa and Manipur.
Punjab will also vote next year. Chief Minister Charanjit Channi, whose nascent government faces a stern test given the party’s leadership crisis, claimed “this hasn’t happened in 70 years”.
Punjab’s neighbour – Haryana, another BJP-ruled state – had also announced a cut in fuel prices, making both diesel and petrol cheaper by a whopping Rs 12 per litre. The administration of the Union Territory of Chandigarh, which also serves as the state capital, announced a Rs 7 cut.
The centre’s November 4 cuts were criticised by the opposition, which pointed out petrol had been hiked by Rs 34 per litre over the past two years and Rs 26 per litre in the past year alone.
Diesel prices have increased by Rs 29.5 per litre over two years and Rs 25 in the past year.
Opposition parties had repeatedly asked the centre to bring down the high prices, pointing out taxes made up over 50 per cent of the price of petrol and around 47 per cent of diesel.
They argued the cuts were cosmetic given the significant recent hikes, and that since states had not increased VAT, they could not be asked to reduce prices and compromise their revenues.