The Union government has announced a reduction in excise duty on petrol by Rs 5 and and diesel by Rs 10 from Thursday.

The government said that the decision, announced on the eve of Diwali, is aimed at giving a further boost to the economy.

Fuel prices have increased sharply across the country in the past few months. The price of one litre of petrol has crossed Rs 100 in most big cities in India. Diesel has breached the Rs 100-mark in more than 18 states and Union Territories.

The Union Finance Ministry said on Wednesday that the rise in fuel rates was on account of a global upsurge in crude oil prices.

“The Government of India has made efforts to ensure that there is no energy shortage in the country and that commodities such as petrol and diesel are available adequately to meet our requirements,” the ministry said.

The government said that the country’s economy has witnessed a “remarkable turnaround” after the coronavirus-induced slowdown. “All sectors of the economy – be it manufacturing, services or agriculture – are experiencing significant upward economic activity,” the ministry said.

The government said that the reduction in excise duty on diesel will “come as a boost to the farmers during the upcoming Rabi season”.

The Centre also urged states to commensurately reduce value added tax on petrol and diesel.

Union Petroleum Minister Hardeep Singh Puri thanked Prime Minister Narendra Modi for the reduction in excise duty. He said that it will constitute a big relief for fuel consumers, especially farmers, ahead of the rabi season.

“The states should add to this celebration by reducing VAT on fuel to give further relief to consumers,” he said.

Congress spokesperson Randeep Singh Surjewala said Indians had taught “a lesson” to the Modi government.

“In May 2014, petrol was priced at Rs 71.41 and diesel at Rs 55.49. At that time, the price of crude oil was $105.71 per barrel,” Surjewala said. “Today, crude oil costs $82 per barrel. When will prices be equal to 2014 levels?”

India depends on imports to meet 85% of its oil needs. Thus, a rise in international oil prices directly influences national fuel rates.

Fuel prices vary in states due to different value-added tax and freight charges. Oil companies revise the fuel prices on the basis of the cost of benchmark fuel in the international market and foreign exchange rates.

Opposition leaders have frequently criticised the Centre for the fuel price rise. Congress leader Rahul Gandhi on Wednesday remarked that inflation was at its peak even though it was Diwali. “It is not a joke,” Gandhi said. “I wish the Modi government had a sensitive heart for the public.”