Petrol will be cheaper by Rs 5 in Maharashtra, with the central and the state governments Thursday announcing a cut of Rs 2.50 per litre each.
The announcement was made by Chief Minister Devendra Fadnavis soon after the central government announced cut in the prices of petrol and diesel by Rs 2.50 per litre.
"Maharashtra government also decided to give additional relief of Rs 2.50 per litre on petrol to give a total benefit of Rs 5 per litre in the state of Maharashtra," Fadnavis tweeted.
Thanking Prime Minister Narendra Modi and Union Finance Minister Arun Jaitley, Fadnavis said the reduction in fuel prices will give a huge relief to citizens.
Earlier, Jaitley announced in Delhi a cut in petrol and diesel prices by Rs 2.50 per litre, factoring in excise duty reduction of Rs 1.50 per litre.
He asked state governments to follow suit by cutting a sales tax or VAT by a similar amount.
The reduction followed petrol and diesel prices touching new highs.
Maharashtra Finance minister Sudhir Mungantiwar told PTI that the state uses 900 crore litres every year and the decision will cause a loss of Rs 2250 crore to the state exchequer.
"Reduction of Rs 2.5 on petrol will mean we will lose a revenue of Rs 2250 annually. However we are ready to bear this if we can make people happy," he said.
An official from state finance ministry said a decision to cut the prices on diesel is being assessed with the technical team.
"The state will act upon it once the committee gives a clear picture on how much the total loss of revenue would be," the official said.
Asked about the revenue loss and its impact, the official said, With the central government bringing down the fuel price, it actually reduces the base price on which state taxes are applicable."
The Centre has brought down the base price of one litre of petrol by 38 paise, which means a revenue loss of Rs 187 crore, he explained.
"The state government has cut Rs 2.50 per litre on petrol which brings down the revenue collection by Rs 1,247 crore. Hence the cumulative loss is of Rs 1,434 crore," he added.
An official from the state's Sales Tax department said if the international prices continue to soar, the petrol and diesel prices will increase further.
"In such scenario, the current decision of Centre and the state will bring temporary relief," he added.
Maharashtra's Minister of State for Finance Deepak Kesarkar said historically, Maharashtra has always been reducing prices of fuel in accordance with the Centre.
"The government has always remained positive on the issue of reducing fuel prices. We are happy to reduce prices of fuel as much as announced by the Centre," Kesarkar said.
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