The timing of the rather surprise cut in the Central tax on diesel and petrol by the Modi government is clearly political. The cut came within 24 hours of the by-elections results in 11 states, the results of which were not entirely to the liking of the ruling party. Although it brought some face saving wins in some seats, the unexpected loss in the Lok Sabha seat in Himachal Pradesh has rung alarm bells and already a blame game is on to fix responsibility. Modi has clearly used the price cuts to exploit the festive spirit on Diwali eve to build some favourable public opinion in favour of his saffron party. To add to the total impact, the NDA-ruled states lost no time in announcing their own cuts in addition to those announced by the Centre. As of now, 22 states and UTs, including Uttar Pradesh, Madhya Pradesh, Haryana, Himachal Pradesh, Karnataka, Gujarat and Goa, have extended additional VAT benefits on diesel and petrol. Karnataka announced a cut of Rs 8.62 a litre for petrol and Rs 9.40 for diesel, while Madhya Pradesh offered an additional Rs 6.89 price relief on petrol and Rs 6.96 on diesel and Uttar Pradesh lowered VAT on petrol by Rs 6.96 and diesel by Rs 2.04 a litre.
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