Delhi Chief Minister Arvind Kejriwal on Thursday announced a reduction in Value Added Tax to 16.75%, which will make diesel cheaper in the city by Rs 8.36 per litre, NDTV reported. Earlier, the VAT was at 30%.

The decision was taken at a meeting of the Delhi Cabinet chaired by Kejriwal.

The price of diesel on Thursday in Delhi, prior to the announcement, was Rs 81.94 per litre, much higher than petrol at Rs 80.43 per litre. The diesel price will now come down from Rs 82 a litre to Rs 73.64 a litre, Kejriwal said according to PTI. He said this will boost Delhi’s economy.

Kejriwal said traders and industrialists in the city had demanded the reduction in diesel prices. “Reviving Delhi’s economy [amid the coronavirus pandemic] is a serious challenge, but will be achieved together with the cooperation of people,” he said.

Global crude oil prices have fallen steeply over the course of the year, by as much as 33% despite recovering from a 21-year low of $15.98 per barrel in April. However, the fall in oil prices has not translated into savings in fuel costs for Indian consumers.

The continuing increase in fuel prices has led to protests from the Congress, the main Opposition party. On June 29, Congress President Sonia Gandhi accused the Centre of setting “a new example of extortion”, and sought an immediate rollback of fuel prices. Gandhi’s remarks were part of the Congress’ “Speak Up Against Fuel Hike” countrywide campaign the party launched on that day.

Oil marketing firms had kept fuel prices constant for 82 days till June 7, in view of the lockdown imposed to battle the coronavirus pandemic. But following this, they began to rise steeply in all major cities in India.