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Government taxes are estimated to account for almost 40% of retail prices of petrol and diesel.

Since mid-August, the petrol price has risen by Rs 6.86 a litre and diesel by Rs 6.73 - the most in any six-week duration after the daily price revision was introduced in mid-June past year. In Bengaluru, petrol and diesel were being sold for Rs 82.46 per litre and Rs 73.90 per litre respectively.

Since the government came to power in May 2014, it has used tax increases on petrol and diesel prices to raise funds for welfare programmes.

Following this, the Gujarat and Maharashtra Governments announced additional relief of Rs2.5/litre Petrol/Diesel.

But. Overall Price Can Be Reduced By Rs 5 Per Litre.

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Bihar government also reduced petrol and diesel prices by Rs 2.52 and Rs 2.55 per litre respectively on Friday.


The Centre on Thursday cut prices of petrol and diesel by Rs 2.5 per litre, to give relief to common man as global oil prices were hovering over four years high.

The fuel prices had been going up every day for last few weeks, burning a hole in people's pockets. PM Modi consulted Union Finance Minister Arun Jaitley and Oil Minister Dharmendra Pradhan.

Jaitley has also asked state governments to follow suit by cutting a sales tax or VAT by a similar amount. He said, the centre has allowed oil companies to raise 10 billion dollars through bonds.

Even though the central government and some BJP-ruled state governments reduced the prices by Rs 5 collectively, the results are not positive for the four metro cities, out of which, three are ruled by non-BJP governments.

The Minister expressed confidence about meeting the fiscal deficit target despite the excise duty cut, saying increased revenue collections would absorb the impact of the cuts. But growing public anger over surging fuel prices has caught the attention of the government.

Before the reduction, Mumbai had the highest Value-Added Tax of 39.12 per cent on petrol, while Telangana levies the highest Value-Added Tax of 26 per cent on diesel. "The government has cut down borrowing this year by Rs 70,000 crore". Any further revenue loss, however, could widen the fiscal deficit.


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