Petrol price was today cut by Rs 3.05 per litre, the first reduction in rates in over five months and the steepest in over five years, while diesel prices were raised by 50 paise a litre.
Petrol will cost Rs.3.05 less a litre, excluding state taxes, and diesel will be expensive by 50 paise per litre from midnight Monday, state-run Indian Oil Corporation (IOC) announced.
The IOC said the decrease in petrol price was due to appreciation in the rupee value and reduction in international motor spirit (MS) prices.
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"Decrease in petrol price has now become feasible because of reduction of MS prices and appreciation of rupee against the US dollar. Both these factors have resulted in the reduction of MS prices which is being passed on to the consumer," IOC said in a statement.
The IOC also effected an increase in diesel price. The government has asked IOC to do so every month.
"Even after the current increase, under recovery on retail diesel shall stand at Rs.10.52 per litre," the statement added.
The three state-owned oil marketing companies had last raised prices of petrol by Rs.1.63 per litre on Sep 14, 2013. Diesel prices were hiked by 50 paise a litre Sep 1.
In Delhi, the petrol price would decrease to Rs.72.40 per litre. In Mumbai, Chennai and Kolkata, petrol would now be priced at Rs.79.49, Rs.79.51 and Rs.75.68 per litre.
Diesel prices in Delhi will be increased to Rs.52.54 per litre. In Mumbai, Chennai and Kolkata, petrol would now be priced at Rs. Rs.59.46, Rs.56.90 and Rs.56.01 per litre respectively.
The government had deregulated petrol prices in June, 2010. However, it subsidies the retail selling prices of diesel, kerosene and cooking gas to insulate domestic users from the impact of a rise in international oil prices and to contain inflationary conditions.
The state-run OMC is expected to incur under-recoveries worth Rs.73,500 crore on sale of the three sensitive products, while the three OMCs combined are predicted to incur Rs.139,600 crore of under-recoveries this fiscal.
IOC added that it is closely monitoring international oil prices and rupee-dollar exchange rate, the outcome of both will be reflected in future price changes.
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