Diesel price per litre in the state is now cheaper by 85 paise following the state government's move to reduce VAT (value added tax) on the fuel from 18% to 16%. A decision to this effect was taken by the state cabinet on Thursday.   This means, people in the state would now have to pay R50.15 paise instead of R51 per litre of diesel. The revised rate of diesel would come into effect from midnight today. 

"The lowering of VAT rates on diesel would give the much needed relief to consumers hit by the hike in diesel price in recent days," said chief minister Nitish Kumar, after the special cabinet meet.

The Centre had hiked the price of diesel by R5 per litre recently.

A couple of days ago, Kumar had dropped ample hints of lowering VAT rates to reduce the diesel price.

The relief, admittedly, is also seen as a deft political move by the NDA government to gain support of the people who are agitated with the recent price rise on fuel and cap on subsidised LPG cylinders.

Earlier, cabinet secretary Ravikant said, the lowering of VAT rates to reduce the diesel price would cause a revenue loss of R217 crore annually and R118 crore in next six months till March, 2013. He said the consumption and enhanced price of the fuel had been taken into account to calculate the losses.