He also noted that the oil marketing companies are fully competent to deal with the decision and the government was not going back on fuel price deregulation.
All the cuts will be effective from midnight, as clarified by Dr. Hasmukh Adhia, finance secretary.
The Centre on Thursday reduced fuel prices by Rs 2.50 per litre with immediate effect. Today's petrol price in state capital Raipur was Rs 84.33 litre and diesel price was Rs 81.21 per litre.
The major announcement comes after Jaitley met Oil Minister Dharmendra Pradhan to look at options to mitigate the impact of hiking fuel prices on the economy.
It is only the global factors, primarily rising prices of crude and domestic policy and other measures like the interest rate hike by the U.S., which have affected India, Jaitley said adding domestic indicators were strong and stable.
Ahmedabad and Mumbai are two cities where diesel prices have crossed Rs 80 per litre.
When Congress demitted power in May 2014, central excise duty on petrol was merely Rs 9.23 per litre and the Modi government has raised it to Rs 19.48 per litre, he said, adding that in May 2014, excise duty on diesel was merely Rs 3.46/litre and the Modi government raised it to Rs 15.33/litre.
Following the Centre's appeal, several State governments including Tripura, Maharastra, Chhattisgarh, Jharkhand and Gujarat announced to provide give additional relief of Rs 2.50 per litre on petrol and diesel to give benefit of Rs 5 per litre to people in their respective States. The prices of petrol are maximum across the state, soaring above Rs 91 in many districts of the state. Fuel prices are not uniform across the country due to variable state taxes.
It had resisted the call for a reduction in excise duty since May when retail rates first shot up and then again from mid-August when fuel prices started moving up. Petrol rates increased by Rs 0.15 per litre and diesel rates increased by Rs 0.20 per litre on Thursday. "Thus petrol and diesel will be Rs 5 cheaper in the state of Gujarat".
Before the reduction, Mumbai had 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.