© Reuters. FILE PHOTO: A worker holds a nozzle to pump gasoline into a vehicle at a petrol station in Mumbai, India, May 21, 2018. REUTERS/Francis Mascarenhas
Musif Vengatil
NEW DELHI (Reuters) – Indian Finance Minister Nirmala Sitharaman announced on Saturday a cut in petrol and diesel taxes to fight inflation and control the prices of essential goods.
In a series of tweets, she said the excise duty on petrol was cut by 8 rupees ($0.1028) per litre and diesel by 6 rupees per litre.
The government’s annual revenue is expected to take a hit of around INR 1 trillion as a result of the move, she said, urging state governments to follow suit with similar cuts as planned by the federal government.
Currently, a litre of petrol costs Rs 105.41, while diesel in New Delhi costs Rs 96.67.
“Prime Minister Narendra Modi has specifically asked all government departments to work with sensitivity and provide relief to ordinary people,” Sitharaman said.
The government will also provide a subsidy of Rs 200 per cooking gas cylinder to more than 90 million beneficiaries under a welfare scheme for women below the poverty line.
The subsidy will have an annual revenue impact of nearly INR 61 billion, she said.
Sitharaman added that the government will also reduce import duties on plastic products, iron and steel raw materials, in hopes of lowering the cost of the final product.
The latest move could add to fiscal concerns and raise doubts about the government’s ability to meet its 2022-23 deficit target of 6.4 percent of GDP.
But inflation has become a major issue for Modi’s government ahead of elections in several Indian state assemblies this year.
Wholesale and consumer prices in India accelerated at their fastest pace in years in April, prompting the central bank to raise interest rates at an unscheduled policy meeting this month and possibly again in June.
Modi said the latest decisions, especially those related to the sharp drop in petrol and diesel prices, would have a positive impact on various industries.
“For us, people always come first!” he tweeted (NYSE: ).
(1 USD = 77.8500 INR)
