States to bear brunt of fuel price cuts, impact to be felt in H2 of FY19

States will bear 42% of the loss on account of the Rs 1.5-a-litre cut in basic excise duty, apart from the additional cuts they have announced; Gujarat, Maharashtra, Haryana to be worst hit

With crude oil prices touching $85 a barrel last week, the Union Government announced a Rs 2.5 cut in petrol and diesel prices. Since then, several states governments have followed suit. 

While revenue from crude oil accounts for a significant portion of both central and state government tax collections, the brunt of these cumulative price cuts is likely to be borne by state governments, and not the Centre. 

Take the reduction in petrol and diesel prices announced by the central government. 

Of the Rs 2.5 reduction in prices, Rs 1.5 per litre is on account of the cut in basic excise duty announced