Madhya Pradesh’s Shivraj Government has reduced 5% VAT on diesel and 3% on petrol. He added that the new prices will come into effect from midnight. The Centre had urged the States to recude VAT for the benefit of customers.
The uptick in petrol and diesel prices weighed heavy on consumer inflation in September, contributing to 5.56 per cent of the index. Prices started surging June end onwards and climbed up to a three-year high.
Union Minister for Petroleum and Natural Gas Dharmendra Paradhan had consequently appealed to the state governments to cut VAT on the fuel products by 5 percent adding that states are the biggest beneficiaries of the revenues generated from petrol and diesel.
India relies on imports to meet 80 per cent of its needs and so domestic fuel rates have been aligned to movement of equivalent product prices in the international market since April 2002. Previously, the rates were changed every fortnight but since June 16 they are revised daily to immediately pass on any movement in international oil prices to consumers and avoid sharp spikes by spreading them in small doses.