In Kerala, fuel prices cheaper by a rupee from today as state cuts tax

Kerala’s Left Front government cut the price of fuel by Re 1 per litre on Wednesday, bringing some relief to people in the state, but also, in the process, challenging the Centre to now do its part.

Petrol and diesel will be cheaper by Re 1 in Kerala from June 1.

“People are really suffering. Their cries are falling on deaf ears. This is a message for the Centre. Hope it will take a cue from this and reduce price accordingly,” said chief minister Pinarayi Vijayan.

The CM said that the state would lose ₹509 crore because of the price cut.

Kerala’s decision comes amid rising concerns over fuel prices on the back of rising global crude prices. A significant component, upwards of 50% of the retail price of fuel are taxes levied by both the Centre and the states.

Kerala’s finance minister Thomas Isaac had previously insisted his government could not slash its portion of the tax in view of the state’s poor economic situation.

Kerala seems to have been spurred into action after the opposition Congress launched a campaign that held the state and Centre responsible for “looting the state”. The CM said the government really wanted to lower its taxes on fuel but couldn’t do more given the poor economic situation of the state.

Petroleum minister Dharmendra Pradhan welcomed Kerala’s move and asked other states to also do their bits to lower prices. ANI reported that he referred to Kerala’s tax rates on petrol and diesel, among the highest in the country.

Kerala charges 32.2% tax on petrol and 25.58% on diesel. On Wednesday, the petrol price in the state capital Thiruvananthapuram stood at ?82.61 and diesel price at ₹75.19. Taxes on fuel, which is outside the ambit of the unified goods and services tax (GST), is a major source of revenue for states. Interestingly, fuel taxes are the third largest revenue source for Kerala after the GST share and liquor.