NEW DELHI India deferred tax levy on unblended fuels, as it tries to control inflation that is already at the top of the central bank’s comfort zone.
India delayed the imposition of a 2 Rupee ($0.025), tax on every litre gasoline that is not mixed with 10%ethanol for a month, according to a government order.
The tax was announced by Nirmala Sitharaman, Finance Minister, in February. It will be imposed starting Oct. 1.
According to the notification, the tax on diesel sales has been delayed by six months.
The Reserve Bank of India has seen India’s inflation rate rise to 6% over the past three quarters. This forced the central bank into raising interest rates aggressively.
On Friday’s monetary policy meeting, RBI increased its benchmark repo rate 50 basis points. This is the fourth consecutive increase. Analysts believe that further tightening may be in the future.
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The government also took steps to limit price increases, including lowering fuel taxes and restricting exports for a variety of goods like wheat and rice.
($1 = 81.5090 Indian Rupees