Maharashtra's new government cuts VAT on fuel to counter overall inflation.
Petrol will now cost Rs 5 less and diesel Rs 3 less in Maharashtra, the state cabinet decided today. This means, from tomorrow, petrol will cost around Rs 106 a litre and diesel Rs 94 in Mumbai. Slight variations are possible as there are other components at play when oil companies set the daily price.
Chief Minister Eknath Shinde said the cut in Value Added Tax (VAT) will cost the state Rs 6,000 crore a year, but it will bring down overall inflation. "When the central government cut excise duty in May to reduce fuel prices, it asked states to cut taxes too. But the previous state government did not. We've now taken that step," he said.
The decision is as political as it is financial — Eknath Shinde's government in partnership with the BJP was formed just two weeks ago after he led a mutiny in the Shiv Sena that displaced Uddhav Thackeray's Shiv Sena-NCP-Congress government. Soon after proving majority in the assembly, Mr Shinde announced last week that VAT on fuel would be reduced.
Deputy Chief Minister Devendra Fadnavis today said the decision is "part of the Shiv Sena-BJP government's commitment to people's welfare". Mr Shinde claims his faction of the Shiv Sena — which has majority of the MLAs with it — is the "real" party, but Mr Thackeray has been fighting that, saying that MLAs alone aren't the party as a whole. So far, at least inside the assembly, the Shinde faction has managed a leg-up.
As for fuel prices, the cut in central excise duty announced by Finance Minister Nirmala Sitharaman two months ago had brought prices down by around Rs 9.5 for petrol, and Rs 7 for diesel. It was one in a series of moves to counter surging prices of essentials.
Ms Sitharaman had then said, "I wish to exhort all state governments, especially the states where reduction wasn't done during the last round (November 2021), to also implement a similar cut and give relief to the common man."