Petrol price was on Tuesday slashed by Rs 3 per litre, the steepest reduction in rates in over five years. The fourth reduction in rates since March means that petrol in Delhi will cost Rs 63.09 a litre with effect from midnight tonight as against Rs 66.09 per litre currently. As usual, the rates will vary from city to city depending on local sales tax or VAT.
In Mumbai, petrol price has been cut by Rs 3.15 to Rs 69.73 per litre, while the fuel in Kolkata will cost Rs 70.35 from tomorrow as against Rs 73.48 per litre. The reduction in rates in Chennai would be Rs 3.18 per litre to Rs 65.90.
Yesterday’s price cut comes after three consecutive rate reductions on the back of falling international oil prices. State-owned oil firms, which revise rates every fortnight, had from April 16 cut petrol price by Rs 1.20 a litre in Delhi.
On March 16, the rates were cut by Rs 2.40 per litre and by Re 1 in the following fortnight. The price cut announced today is the steepest since December 2008 when rates were slashed by Rs 5 to Rs 45.62 per litre.
Announcing the reduction, Indian Oil Corp (IOC), the nation’s largest fuel retailer, said that since the last price change, international prices have declined from $116.61 per barrel to $107 a barrel.
Rupee-US dollar exchange rate too improved from Rs 54.51 to a US dollar to Rs 54.26. “Thus, it has been decided to pass on the benefit to customers and accordingly the aforesaid reduction in the retail selling price of petrol is being affected,” an IOC statement said.
Diesel prices, however, have not been raised though there still remains a substantial gap between its pump price and market rate. The government had in January allowed the fuel retailers to raise diesel price in small doses of 40-50 paise each month till it reaches market rate.
But the oil ministry has asked the retailers to hold the price line since it would be difficult to explain the hike to consumers at a time when petrol price was being cut. While petrol price was at par with market rates, politically it would be difficult for people to accept the pricing difference between the two fuels. Besides, with polls in Karnataka scheduled next month, any hike in diesel price would give a handle to the Opposition to beat the UPA government as one who cared only for the rich.