New Delhi, June 27
Finance Minister Pranab Mukherjee today wrote to all state governments asking them to reduce local taxes on diesel, kerosene and LPG. States should cut levies in line with the duty cuts undertaken by the Central Government to provide some relief to the common man, the FM said in the letter. States like West Bengal and Haryana have been the first off the blocks to cut local taxes on these products.

The Finance Minister has stated in his letter that even though crude oil prices in the international market had been very high over the last six months, the government had not passed on the hikes at the retail level to protect the common man. However, this has led to heavy losses for state-owned oil marketing companies. He said the firms were losing over Rs 450 crore a day due to a significant difference between international and domestic price, leading to the revision in administered prices.

The FM said that the price hike has been minimal and even though the Central Government had been under compulsion to maintain fiscal and budgetary resource management targets and find additional resources to finance various welfare schemes, it had sacrificed its revenues from the oil sector from Customs and Excise Duty to minimise the impact.