The chief ministers of a number of BJP-ruled states also expressed their appreciation of the move, while stating that they will follow suit and cut state taxes.
The national reduction translates to a 3 percent cut in petrol prices, and a 3.3 percent fall in diesel prices in India's capital New Delhi.
Maharashtra Chief Minister Devendra Fadnavis was the first one to announce the decision. Only a few weeks ago, multiple media reports, quoting anonymous senior government officials, indicating that the government had no plans of cutting excise duty.
Minister of State for Finance Shiv Pratap Shukla on Wednesday said Prime Minister Narendra Modi is chalking out plans to reduce the skyrocketing fuel prices. Surjewala asked why the "fuel robbery continued when the prices of crude oil reduced by 45 per cent internationally". A high-level meeting convened by the Prime Minister Narendra Modi has made a decision to reduce the Excise Duty by 1.50 Rupees.More news: Wife of Malaysia's ex-PM Najib charged with money laundering
"The states' revenue increases because of increased crude oil prices and hence it is easier for the states to absorb Rs 2.50", he said. "Thus petrol and diesel will be Rs 5 cheaper in the state of Gujarat". The governments of Maharashtra, Gujarat, Chhattisgarh, Jharkhand and Uttar Pradesh - all under the rule of the Bharatiya Janata Party - have already said they will do so.
The Modi government's policy of high oil taxes has become a source of political debate over the last month, with surging global oil prices no longer providing the Centre with a cushion to defend itself with.
Another Congress leader, Ashok Chavan, said, "The current prices (of petrol) are around Rs 92 per litre".
Jaitley said that in addition to excise duty being cut by Rs 1.5 per litre, oil marketing companies would also take a hit of Re 1 per litre as well.More news: First trailer released for Dick Cheney biopic starring Christian Bale
Jaitley, however, said asking oil companies to bear a part some burden is not going back on deregulation. In Kolkata and Chennai, petrol prices climbed by 15 paise to Rs 85.80 and Rs 87.33 per litre, respectively. Of this, IOC's share would be roughly half and the rest split equally between HPCL and BPCL.
"The Brent oil since yesterday has crossed 86$/bbl which is the highest in the last four years".
Nearly half of the fuel price is made up of taxes. Diesel prices in Chennai increased by 22 paise to Rs 79.79 a litre and by 20 paise to Rs 77.30 per litre in Kolkata.
Mumbai has the highest Value-Added Tax of 39.12 per cent on petrol, while Telangana levies the highest Value-Added Tax of 26 per cent on diesel.More news: Duke and Duchess of Sussex visit county that inspired their royal titles