The Indian government reduces taxes on fuel, essential items to fight inflation According to Reuters
© Reuters. FILE PHOTO: A worker holds a hose to pump gasoline into a vehicle at a fuel station in Mumbai, India, May 21, 2018. REUTERS / Francis Mascarenhas
By Munsif Vengattil
NEW DELHI (Reuters) – India on Saturday announced a series of changes to its tax structure on key commodities aimed at protecting consumers from price hikes amid high inflation.
Finance Minister Nirmala Sitharaman announced cuts of excise tax on gasoline by 8 rupees ($0.1028) per liter and 6 rupees per liter for diesel.
The new tax regime on petrol and diesel could cost the government around 1 trillion Indian rupees in annual revenue due to lower revenues, she said in a series of tweets.
The government also eliminated import tax on anthracite coal, PCI coal and coke to reduce raw material costs for domestic market demand.
The latest measures will take effect May 22, the government said in a statement following the statement by Sitharaman, who also urged state governments to follow suit with a similar planned fuel price cut. of the federation.
A liter of petrol currently costs 105.41 rupees, while diesel is at 96.67 rupees in New Delhi.
The government will also provide a new subsidy of 200 rupees per can of cooking gas to more than 90 million beneficiaries under a welfare scheme for women below the poverty line.
Sitharaman said the subsidy will bring in annual revenue of nearly 61 billion Indian rupees.
“Prime Minister Narendra Modi has specifically asked all the arms of the government to work sensitively and provide relief to ordinary people,” she said.
The government is also working to reduce taxes on raw materials for plastic products to lower the cost of the final product.
The latest moves are likely to increase fiscal concerns and raise doubts about whether the government can meet its deficit target of 6.4% of GDP for the period 2022-23, experts said. .
But inflation has become a major issue for Mr. Modi’s government ahead of elections to several of India’s state assemblies this year.
A sharp increase in inflation means an increase in input costs for businesses.
The increase prompted the central bank to raise interest rates at an extraordinary policy meeting this month.
“Today’s decisions, especially those regarding the significant reduction in gasoline and diesel prices, will positively impact various sectors, bringing relief to our citizens,” he said. Modi writes on Twitter (NYSE:). “It’s always the first for us!”
(1 dollar = 77,8500 Indian rupees)
