Petrol and diesel to cost Rs 2 less

Public sector oil companies reduced petrol and diesel prices by Rs 2 per litre each on Monday as international oil prices slumped to five-year low.

This is the eighth reduction in petrol prices since August and the fourth in diesel since October. The price of petrol will come down from Rs 63.33 to Rs 61.33 in Delhi, the lowest level in nearly four years.

Diesel will cost Rs 50.51 a litre in Delhi, the lowest since July 2013, down from Rs 52.51. The prices of the two fuels will differ slightly in Gurgaon and Noida as the state governments charge different rates of local sales tax or value-added tax.

The rate cut would have been even steeper if the government had not raised excise duty on petrol by Rs 2.25 and diesel by Rs 1 to curtail the fiscal deficit. The price of crude oil in the international market has nearly halved to $62.37 per barrel compared to $115 per barrel in June. Close to 80 per cent of the country's crude oil requirement is imported and any decline in international prices cuts the cost of imports.

The prices of petrol and diesel were last cut on December 1 by 91 paisa and 84 paisa respectively (including state levies at Delhi) on the back of declining international oil prices. After Monday's reduction, petrol price has been cut by Rs 12.27 per litre cumulatively since August.

Diesel price was cut for the first time in more than five years on October 19 by Rs 3.37 when the government decided to deregulate the fuel. This was followed by a Rs 2.25 reduction on November 1 and 84 paisa per litre on December 1. Cumulatively, diesel prices have been cut by Rs 8.46 a litre in four reductions.