In a significant decision which would give major relief to the people, the Petrol and Diesel prices in Jammu and Kashmir have been slashed by Rs 5 per litre.
"It certainly has fiscal implications".
After the minister's announcement, may states including Jharkhand, Gujarat and Chhattisgarh too announced a reduction in fuel prices. The Nifty Energy Index fell 6.14 percent.
In the process, the Modi government also scored an own goal against its pet theme of simultaneous polls as some citizens prayed for "an election a month or a week" to keep prices down.
The reduction follows petrol and diesel prices soaring to new highs.
According to the Finance Minister, the move will have an impact of Rs 10,500 crore this fiscal but the government is confident of achieving the fiscal deficit target.
Central Government has finally made a decision to stop the arrest of increasing Fuel Prices.
Mr Jaitley said that since states taxes on petrol and diesel was on ad valorem basis, they will only have to forego additional revenue which came after oil prices had started rising.
Petrol was sold at 83.85 rupees a litre, while diesel was sold at 75.25 a litre on October 3, according to state-run retailer Indian Oil Corp's website.
However, the Federation of All Maharashtra Petrol Dealers Association (FAMPEDA), Chairman, Uday Lodh, while welcoming the reductions, pointed out that the daily price increase by the Oil Marketing Companies will continue as per the global crude oil price fluctuations. But it is unclear how many of India's 29 states will meet the request, though some had in recent weeks already reduced their take. But with a weakening rupee, it will likely have fewer options in the form of import-related tax cuts.