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State-run oil marketing company (OMC) Indian Oil Corp. Ltd on Thursday cut diesel and petrol prices by 5 paise and 7 paise per litre, respectively, after automobile fuel prices reached a record high on Tuesday.
Thursday’s petrol price cut followed Indian Oil’s move of reducing petrol and diesel prices by 1 paisa per litre on Wednesday, a move that was mocked by the opposition. The Kerala government on Wednesday announced a Rs1/litre diesel and petrol price cut from Friday, scoring a political point against the centre amid record prices.
Diesel and petrol prices in Delhi on Thursday were Rs69.25 per litre and Rs78.35 per litre respectively at Indian Oil outlets. Retail prices of petrol and diesel in India track the global prices of these auto fuels, not crude, though they are broadly linked to crude oil price trends, which have firmed up.
With dynamic fuel pricing introduced in June last year, the National Democratic Alliance (NDA) has maintained that it has no role in pricing. Petrol prices were deregulated in June 2010 by the Congress-led United Progressive Alliance (UPA) government. The Prime Minister Narendra Modi-led NDA government decontrolled diesel prices in October 2014.
These two days of minor price cuts came after prices were raised daily since 14 May after three state-run OMCs—Indian Oil, Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL)—refrained from increasing prices since 24 April and paused it while the Karnataka election campaign was going on.
With fuel prices reaching a record high in India, there has been a demand for an excise duty cut on petrol and diesel ahead of 2019 Lok Sabha elections. However, the NDA has signalled its intent to stay the course on fuel pricing reforms and said that it was working toward a “long-term solution”. The Opposition has been trying to corner the government on the issue.
“Congress party will fight in the Parliament and on the streets until the fuel prices are reduced. Government is liable to bring petroleum products under GST,” R.P.N. Singh, a senior Congress leader and former union minister, told reporters on Wednesday.
The centre is in favour of bringing petroleum products under the new indirect tax regime. At present, petroleum products are included under the goods and services tax (GST), in line with amendments to the Constitution. But GST will start to be levied on petroleum products only once the GST Council—the federal body comprising the Union and state finance ministers—approves the move.
“Another second anniversary gift to the people: the sales tax on petrol reduced by 1.69% and diesel by 1.75% in Kerala. The retail prices to decline by 1 Rupee…Now will PM Modi be willing to roll back his tax hike?” Kerala’s finance minister Thomas Isaac tweeted on Wednesday.
The price reduction on Wednesday and Thursday came after the Organization of the Petroleum Exporting Countries (Opec) and Russia agreed to ease crude oil supplies. There has been a rally in oil prices due to a combination of factors, including President Donald Trump pulling the US out of the 2015 nuclear accord with Iran, Opec and Russia cutting supplies, falling production in Venezuela and geopolitical tensions.
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