In a relief to consumers hit hard by the unrelenting rise in fuel prices, the government on Thursday cut petrol and diesel prices by Rs 2.50 per litre that will result in a revenue loss of Rs 10,500 crore in six months. It also asked the states to effect a similar cut so that the relief could be to the tune of Rs 5 per litre.

Announcing the much sought-after relief, Finance Minister Arun Jaitley told a press meet that the cut will be effected through slashing of excise duty to the tune of Rs 1.50 per litre while the oil marketing companies (OMCs) will absorb the impact to the tune of Rs 1. "I am also writing to the states to make corresponding cuts in VAT of equivalent amount so that consumers get '5 relief in retail prices," he said.