There is a reverse trend in fuel prices in India, with OMC trimming both petrol and diesel prices from May 30. Prime Minister Narendra Modi had to bring some relief in petrol and diesel prices which were at record highs, levels that were never witnessed in India. Interestingly, government has already ruled out any excise duty cut and states continue to remain reluctant in bringing any relief in Value Added Tax (VAT). However, looks like the upcoming elections has finally forced government to ask OMCs to start reversing hike trend in fuel prices. State elections are expected to take place in Chhattisgarh, Madhya Pradesh and Rajasthan in late 2018, calling for major urgency in relaxing petrol prices to save the NDA government from facing the repeat of the Karnataka scenario. 

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In nearly months time, state-owned OMCs like HPCL, IOCL and BPCL have either trim down petrol and diesel prices or maintained a status quo on them. 

While each coming day, fuel products are seeing reduction it needs to be noted that Mumbai city has seen the most relaxation. 

Last month, India’s financial hub Mumbai was selling petrol over Rs 86 per litre and diesel by over Rs 73 per litre.  This was at record high, where consumers pocket took a hit for purchase of 1 litre fuel products. 

However, from May 30 to till date, Mumbai has seen major revival in their fuel products prices. In this period, petrol have been cut by Rs 3.12 per litre, while diesel has been brought down by Rs 2.26 per litre in this city. 

Today, 1 litre of petrol and diesel are priced at Rs 83.12 and Rs 71.52 in Mumbai. The price of petrol and diesel today were cut by 18 paisa and 14 paisa respectively in the city. This was despite international crude oil prices rising on Wednesday as a supply disruption in Canada tightened the market and after U.S. officials told importers to stop buying Iranian crude from November. 

The previous hikes in fuel prices was on the back of higher international crude oil prices which even clocked a 2014-high of $80 per barrel in May month. This forced government to even ask OMCs for absorbing 1 litre hike in petrol and diesel prices. 

Moreover, today Brent crude futures had climbed 61 cents, or 0.8 percent, from their last close to $76.92 per barrel by 0650 GMT. U.S. West Texas Intermediate (WTI) crude futures were at $70.88, up 35 cents, or 0.5 percent.

In October 2017, the finance ministry had cut excise duty by Rs 2 per litre and even urged states to trim down VAT rates. 

The Maharashtra Cabinet followed the direction, and reduced VAT on petrol by Rs 2 per litre and diesel by Rs 1 per litre effective from midnight. 

Oil Minister Dharmendra Pradhan that time had mentioned that states must give further relief by reducing VAT by 5%.

Mumbai levies VAT of 39.12% on petrol which is highest compared to other cities in India. The city charges VAT of 24.79% on diesel currently.