Immediately after the announcement, and the declaration by the Finance Minister, three states have responded, and reduced the price of petrol and diesel by Rs 2.5, thereby making the overall reduction to Rs 5 per litre.
According to Telangana Petroleum Dealers Association, the fuel prices would come down by Rs 3 as the Centre had announced a cut in excise duty.
Poll-bound Rajasthan, a BJP-run state, had already pared its rate in September.
Yet now that the higher oil prices have combined with a falling rupee after the latest quarterly economic growth figures turned out disappointing, with the deficit widening, India is facing a serious challenge in sustaining its growth while reducing the adverse impact of the latest oil market developments.
Jaitley said the move followed Brent crude oil touching four-year high of United States dollars 86 a barrel Wednesday and interest rates in U.S. reaching seven-year high.
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► Jharkhand CM Raghubir Das said: The state government has also made a decision to give an additional relief of Rs 2.5/litre on diesel in the state.
It had resisted the call for a reduction in excise duty since May when retail rates first shot up and then again from mid-August when fuel prices started moving up. "The government has cut down borrowing this year by Rs 70,000 crore". Why the state government is not reducing its Value-Added Tax?
Several states had announced reduction in fuel prices by cutting sales tax/VAT.
Shares in Oil and Natural Gas Corp (ONGC), India's biggest crude oil producer, also slid 15 percent. They were raised a day after the polls got over. The revenue department will cut excise duty by Rs 1.50 and oil marketing companies will absorb Re 1 per litre. The prices started going up after voting was over on December 14.
"The people will pay a heavy price for the follies of the BJP-led NDA government". "After the cut in petrol and diesel prices, let's pray to have elections every month or perhaps every week", one tweet said. At the same time, the prices of crude oil in the worldwide market was $108 per barrel but the prices of the crude oil dropped to $77 per barrel at the start of November and further reduced to $36 in March, 2016.