Kerala Finance Minister KN Balagopal on Thursday, November 4, said that Kerala will not reduce Value added Tax on (VAT) on fuel, as the state was in a severe economic crisis. He said that the state can reduce prices only in proportion with the reduction from the Union government. He also said that the Union government's decision to cut excise duty on petrol and diesel by a "small margin" of Rs 5 and Rs 10 respectively was "a temporary measure to save face" and "throw dust in the eyes of the people."

In Kerala, petrol price was reduced by Rs 6.57 and diesel by Rs 12.33. The minister, in a statement, said that for any real difference to be made, the Union government should cut the special tax and cess of Rs 30 per litre levied by it on diesel and petrol. He said the states were not receiving a share of the revenue collected via the additional tax which was being levied irrespective of the international price fluctuations of petroleum.

"The Union government decided to reduce the excise duty on petrol and diesel by a small margin following strong protests from the people. This reduction has been made to temporarily save face in view of the rising public outcry across the country. This is actually a ploy to throw dust in the eyes of the people," the minister said in the statement.

He further said the Left government in Kerala has not increased the state tax on petrol and diesel for the last six years. In fact, the state tax was reduced once during this period, he added. He said the Union government should immediately reduce the Rs 30 additional levy on petrol and diesel to help the people.

The Kerala Assembly on Tuesday, November 2, had witnessed a war of words between the CPI(M)-led ruling front and the Congress-headed opposition over frequent fuel price hike in the country and the latter walked out of the House terming it "state-sponsored tax terrorism." Though the LDF government maintained that it was the Union government and not the state government which was responsible for the fuel price hike, the UDF members wanted it to forego the additional tax revenue generated on its sales for the sake of struggling commoners.