Fuel prices in Kerala are set to come down by Rs 1 per litre after the CPM-led government decided on Wednesday to slash the tax levied on petrol and diesel in the state.

The decision was made at a State Cabinet meeting here and will be effective from June 1, Chief Minister Pinarayi Vijayan told reporters.

Kerala levies 31.8% and 24.52% tax on petrol and diesel price respectively and now the rates will be reduced by 1.69% and 1.75% for petrol and diesel respectively.

At a time when the state is facing financial constraints, the move is set to cost it Rs 509 crore in annual tax revenue, the chief minister said.

Kerala is the first state to respond to the recent spike in fuel prices with an initiative of its own to reduce the prices.

Vijayan said the Centre had not responded to requests from across the country seeking a cut in fuel prices.

“The prices can’t continue to soar like this. The decision to reduce prices at the state level is a message being sent out to the Centre, saying this is what we have done about the crisis and also asking the Centre what it would do (to bring down the prices),” he said.

The Indian Oil Corporation, in its website, recorded petrol and diesel prices in Thiruvananthapuram on Wednesday as Rs 82.61 and Rs 75.19, respectively.

Finance Minister T M Thomas Isaac said Kerala, being a consumer state, suffered the most from fuel price hikes.

“Requests to the Centre seeking a reduction in prices have become pointless. It shouldn’t be a surprise if prices go beyond Rs 100 per litre. It’s in these circumstances that the state government decided to extend relief to the people, though there are financial constraints,” Isaac said.

Isaac reiterated that petrol price in the state had increased since the BJP-led government took charge at the Centre in 2014, only in proportion with the excise duty hike (from Rs 9.2 per litre to Rs 19.48 per litre) imposed by the Centre between 2014 and 2018.