New Delhi, Sept 11: A reduction in prices of petrol and diesel may not be in sight for now as top government officials have ruled out the possibility of slashing central duties.
A reduction of fuel tax by as low as Rs 2 per litre could cost the exchequer a loss of Rs 30,000 crore, a finance ministry official told reporters on the condition of anonymity.
The revenue loss, he added, would further contribute to the widening of the current account deficit -- which is at a five-year high, which in turn would lead to further weakening of the rupee against the US dollar.
The slashing of excise duties will also adversely affect the states, as 40 per cent of the tax collected by the Centre from a state is transferred to the federal government.
Under such circumstances, the immediate relief to consumers could be granted only by the state governments by reducing the VAT. At least two states governments - Rajasthan and Andhra Pradesh - have announced a reduction in levies to bring respite to the motorists.
In Rajasthan, fuel rate came down by Rs 2.5 per litre as the Vasundhara Raje government reduced VAT by 4 per cent. In Andhra Pradesh, Chief Minister Chandrababu Naidu announced a Rs 2 per litre cut on petrol and diesel by revising VAT rate accordingly.
Meanwhile, fuel prices continued to soar in other parts of the nation today, with petrol turning as costly as Rs 88.26 a litre in Mumbai and Rs 80.87 in Delhi.