Following the centre's path, Gujarat and Maharashtra also reduced fuel prices by 2.50 per litre.
Petrol and Diesel price has tightened the pockets of the consumers due to the daily price hike. The effective reduction would be Rs 4.06 per litre. The prices came down following Union Government's decision on Thursday to cut down the excise duty Monday fuel in the wake of falling rupee and increasing crude prices.
"And reducing oil prices, if you say is good politics, so be it", said Mr Jaitley.
He said after the Centre's relief of Rs.2.50 per litre on diesel, the state government has made a decision to give a further relief Rs.1.56 per litre by way of taxes.
Global oil prices still a major factor on how petrol and diesel are ultimately priced. Finance minister Arun Jaitley is hoping that this cut would spur demand which would boost the economy. In Mumbai, the prices of petrol and diesel rose to Rs 87.15 per litre and Rs 76.75 per litre respectively. The minister said the Centre would reduce the excise duty by Rs 1.5 per litre while oil marketing companies would absorb the rest Re 1 per litre.
Briefing media after the meeting, Finance Minister Arun Jaitley had said the government has decided on "five steps" to contain CAD, which widened to 2.4 percent of the GDP in the first quarter of 2018-19.
Brent oil on Wednesday crossed $86 per barrel, which is the highest in the last four years, and rising interest rates in the United States have a significant impact across global markets, said Jaitley.
Shares of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd extended losses and were down as much as 24.38% to 27.96%. BJP-ruled Gujarat, Tripura and Chhattisgarh governments have also announced a similar reduction in oil prices.
Jaitley was still speaking as of last updating this report. Delhi charges a Value-Added Tax of 27 per cent on petrol and 17.24 per cent on diesel. Absorbing this Rs 10,500 crore in increased collection and maintaining fiscal deficit I am confident we will be able to do that.