Reserve Bank of India Governor Shaktikanta Das on Thursday said that the Centre and states needed to act in a coordinated manner to reduce tax on petrol and diesel, PTI reported. Das’ remark came amid the sharp increase in fuel prices in the country.

Das, during his address to the Bombay Chamber of Commerce, said that such coordination was important because both the Centre and states imposed taxes on fuel.

The RBI governor added that revenue pressures on the government were completely understandable, since they had to spend more to tide over the impact of the coronavirus crisis. “But having said that, the impact on inflation also is something which comes in from the fact that petrol and diesel prices do have an impact on the cost of manufacturing, production,” Das was quoted as saying by the news agency.

However, Das said India was about to witness a “turnaround in fortunes”. “In contrast to rest of the world, the caseload of Covid-19 in India has declined and it is crucial for us to consolidate this decline and capitalise on the success that has been hard-earned,” Das said during his address.

The RBI governor emphasised on the need to remain vigilant amid a surge in coronavirus cases in some parts of the country. “The Covid war continues,” Das said. “The battle of 2020 has been won, albeit with significant costs in terms of lives, livelihood and economic activity. We need to win the battle of 2021 also. Let us resolve to eventually win this war.”

Fuel price rise in India

Petrol and diesel prices across the country have soared over the last few weeks. However, states like Rajasthan, Nagaland, West Bengal and Assam have cut taxes on fuel to provide some relief to the people.

On the other hand, Uttar Pradesh on Thursday ruled out any such tax reduction, PTI reported. UP Cabinet minister Satish Mahana, while responding to Samajwadi Party Narendra Verma during the Question Hour in the state Assembly, said that the government needed revenue for development projects and the betterment of health infrastructure amid the coronavirus crisis.

Opposition parties have blamed Prime Minister Narendra Modi’s government for the exorbitant fuel prices, accusing it of raising taxes to scoop out the benefit reaped from international oil rates plunging to a two-decade low in April and May. They have been accusing the government of profiting off the suffering of people.