New Delhi: In a crucial move today, the Narendra Modi government decided to cut down fuel prices by Rs 2.50, ignoring the rising prices of brent crude oil in the international markets. 

Petrol and diesel prices surged up to 23 paise on Thursday. While petrol has touched Rs 84 per litre in Delhi, diesel prices were pushed a little further to Rs 75.45 per litre. In Mumbai, diesel crossed the Rs 80 mark for the first time, recording a 21 paise rise from the previous hike. Petrol is already being sold at over Rs 92 per litre in several districts of Maharashtra as well as Bihar.
Briefing the media, finance minister Arun Jaitley said: "Oil marketing companies will absorb Rs 1 from the central government cut on Rs 2.50 relief on petrol and diesel.” He added that the states will be asked to cut down the same amount to bring in further relief to the consumers.

Following the Centre's significant move, Gujarat and Maharashtra followed the suit. The fuel prices in these two states will be now Rs 5 cheaper. Normally, the percentages of tax levied on fuel by the Centre and the states are equal. 


"Let the states decide. I am not interfering in the states," the finance minister said. adding, "I will write to state govt seeking cut in local tax rates on petrol."

States where Assembly elections are imminent are likely to be the first to follow the Centre in reducing their component on the tax on petrol and diesel: Madhya Pradesh, Rajasthan and Chhattisgarh.

Jaitley further said: “Since yesterday, crude price has crossed $86/bbl, highest in the last four years and the interest rate in the US has risen to 3.2%, the highest in seven years. Both these situations have led to a significant impact across global markets.” 

On Wednesday, Jaitley and minister of petroleum and natural gas Dharmendra Pradhan held a meeting amid concerns of high fuel prices adding to farmers' distress, particularly in the upcoming rabi crops season. Diesel, which is being sold at record high prices, is the most used fuel in the farm sector. Tractors tilling the soil to irrigation pump sets -- all use diesel, and a spike in its prices is bound to add to the cost cost of farming.