Oil minister Murli Deora has asked states to emulate the Delhi government’s step in reducing VAT on diesel and switch to specific rate regime, even as chief economic advisor Kaushik Basu sought a debate over taxes on petroproducts and called for giving private refiners level field to compete and bring down prices.

Complimenting Delhi CM Sheila Dikshit for reducing VAT from 20% to 12.5%. which will reduce the diesel price by Rs 2.70 a litre, Deora appealed other states to provide relief to consumers in a similar fashion. Last month’s increase in fuel prices had a cascading effect on retail rates paid by consumers due to the ad-valorem (as percentage of the price) nature of the state tax.