The petrol price was slashed by Rs.1.26 from the hiked rate of Rs.73.18 per litre. Now, petrol in Delhi will cost Rs.71.82.
Making the announcement while presenting the budget for 2012-13, Chief Minister Sheila Dikshit said: "At present the price of petrol in Delhi is the lowest among all the metros and lower compared to the rates in the neighbouring states of Haryana and UP (Uttar Pradesh) too."
"I propose to exempt the recently announced increase in the price of petrol from the levy of 20 percent VAT. This would cushion the impact of the increase to a considerable extent," said Dikshit, who also holds the finance portfolio.
But, if petrol prices have been slashed, compressed natural gas (CNG), that powers auto-rickshaws and buses and most taxis, was made costlier.
"I propose to levy at a moderate rate of 5 percent on CNG used in the transport sector. It is relevant to mention that the neighbouring states of Uttar Pradesh and Haryana are already levying VAT of 12.5 percent and 5 percent respectively on CNG."
She justified the move by saying that CNG rates in other states are much higher.
Dikshit, who has been in power for the past 14 years, faces a litmus test in next year's assembly elections. The Congress got a major drubbing in the recently held elections in to the trifurcated the Municipal Corporation of Delhi.
The Delhi budget is pegged at Rs.33,436 crore, over last years' Rs.27,067 crore.
The plan outlay will be Rs.15,000 crore and the non-plan expenditure has been pegged at Rs.18,268 crore.
"The budget will be financed from 94 of our own resources and 6 percent as grant from centre," Dikshit said.
A major share - Rs.3,372 crore - has been allocated to the transport sector.
Keen to provide a better health system, the Delhi government also allocated Rs.2,124 crore for upgrading dispensaries and hospitals and building better healthcare infrastructure.
"Our approach in the 12th (Five Year) Plan is to increase the bed availability to three beds to per thousand population," Dikshit said.
A total of 2,900 new hospital beds will be added with construction of new hospitals and expansion of existing ones.
The government has zeroed in on social sector allocating it a share of Rs.9,796 crore out of the plan outlay.
A total of two lakh vulnerable households will get a cash food subsidy of Rs.600 per month which will be given to the family's senior most female member under a new programme titled "Dilli Annashree" scheme.
The government will also provide loan up to Rs.5 lakh to entrepreneurs from scheduled caste, scheduled tribe, other backward classes and minority communities under the new "Dilli Swarojzar Yojana".
The budget also offers sops for women: hairpins, hairbands, hairclips, safety pins, and saree falls have been made cheaper.