NEW DELHI: Finance Minister Nirmala Sitharaman on Saturday announced a reduction of taxes on petrol and diesel to fight inflation and keep prices of essential items in check.
The excise duty on petrol was reduced by 8 rupees US $0.1028 per litre, and for diesel by 6 rupees per liter, she said in a series of tweets.
She said that the government is expected to take a hit of 1 trillion Indian rupees on its annual revenue due to the move, and she urges the state governments to follow suit with similar reductions in line with the federal government's plan.
A liter of petrol is currently 105.41 rupees, while diesel is 96.67 rupees in New Delhi. Prime Minister Narendra Modi has called on all arms of the government to work with sensitivity and give relief to the common man, Sitharaman said.
The government will give 200 rupees per cooking gas cylinder to over 90 million beneficiaries under a welfare scheme for women below the poverty line.
The subsidy will have an annual revenue implication of nearly 61 billion Indian rupees, she said.
Sitharaman said that the government will reduce import duty on raw materials for plastic products, iron, and steel and reduce the cost of final products.
Inflation has become a major headache for Modi's government ahead of the election of several Indian state assemblies this year.
In April, India's wholesale and consumer prices accelerated at their fastest pace in years, prompting the central bank to hike interest rates at an unscheduled policy meeting this month, with another likely in June.
Modi said the latest decisions, including the one relating to a drop in petrol and diesel prices, will positively affect various sectors.
People are the first to come first for us! He wrote on Twitter.