InvestorQ : How much is the excise duty cut on petrol and diesel likely to impact the price of diesel and petrol across India?
Ria Jain made post

How much is the excise duty cut on petrol and diesel likely to impact the price of diesel and petrol across India?

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Dia Deshpande answered.
1 month ago
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You must remember that the central government has only cut the rates of central excise duties. This will have to be followed up by the states also cutting VAT rates so that the impact can be much bigger. As on Friday, there has been solid progress with nearly 23 states and UTs cutting value-added tax rates on petrol and diesel. This is likely to magnify the impact of the fall in price for the end consumer.

Some of the examples of states really stand out. For example, in some of the BJP rules states like Karnataka, Puducherry and Mizoram, the price per litre of petrol has come down anywhere between Rs.13 and Rs.14. Similarly, the price of diesel in these three states is down much more sharply between Rs.18 and Rs.20 per litre. This is likely to make a big dent on inflation as diesel has strong externalities in terms of collateral price impact.

However, a host of non-BJP rules states have not yet taken a decision on reduction of VAT rates still. Some of the major states that are yet to take a call on VAT rate cuts include Rajasthan, Maharashtra, Odisha, Chhattisgarh, Delhi, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Kerala, Jharkhand and Punjab. For states, the VAT on petrol and diesel is one of the largest sources of state revenues and this could widen state fiscal deficit.

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