In the steepest ever hike, petrol price was increased on Wednesday by Rs 7.50 a litre with effect from midnight tonight.
State-owned oil firms said they will raise petrol price by Rs 6.28 per litre excluding local sales tax or VAT. The hike translates into Rs 7.50 per litre in Delhi.
Petrol in Delhi currently costs Rs 65.64 a litre and after the increase it will be priced at Rs 73.14 per litre. While petrol will now cost Rs 77.69 per litre in Kolkata, the price in Mumbai will be Rs 78.16. In Chennai the petrol price will now be Rs 77.23, effective midnight.
With rupee depreciation leading to jump in oil import bill, Petroleum Minister S Jaipal Reddy on Tuesday had said that there was an immediate need to raise fuel prices.
The government had decontrolled petrol price in June 2010 but rates were last increased on November 4 last year. This despite oil price rising by 14 per cent and 7 per cent fall in value of rupee against the US dollar.
Price of diesel, kerosene and cooking gas were raised in June last year.
"If rupee depreciates by one against the US dollar, our oil companies lose Rs 8,000 crore (annually)," Reddy said. "Rupee dipped (to an all-time low of) Rs 55 (to a US dollar). Last year it was Rs 46. This translates into a loss of Rs 72,000 crore (on account of rupee depreciation) this year."
"Seeing all this, something needs to be done, but when will it be done, how it will be done... I cannot make a forecast," Reddy had said.
State-owned oil firms, who had in the fiscal ending March 31, 2012 lost Rs 4,860 crore on petrol sales, are currently losing Rs 6.28 per litre on petrol. After including 20 per cent VAT, the desired increase in petrol price in Delhi comes to Rs 7.53 a litre.
BJP today flayed the steep hike of petrol terming it as "unreasonable" which will make the life of the common man "miserable".
"This whole petrol price hike is clearly unreasonable, arbitrary and is condemned as it will put further inflationary pressure and lead to further rise in prices. Life of the common man will become more difficult and miserable," BJP's chief spokesperson Ravi Shankar Prasad said.
He said the petrol price hike "will have a cascading effect and prices are going to go out of control. It is condemnable."
He alleged the government's inept handling of the economic situation was responsible for this. "The gross mismanagement of food and general economy by the UPA regime has led to the decline of the Rupee," he said, adding it has also led to the rise in prices of petroleum products.