Petrol prices cut by Rs. 2 a litre

After the sharp criticism over the steepest hike, petrol price was on Saturday cut by Rs 2.02 rpt 2.02 per litre, a partial rollback of the Rs 7.54 a litre increase effected more than a week ago.

The reduction, a result of fall in international oil prices, will mean that petrol in Delhi will cost Rs 71.16 per litre from Saturday midnight, as against Rs 73.18 at present.

The decision, flowing out of the fortnightly review by oil marketing companies, came as some relief for consumers battered by double-digit inflation and the May 24 hike which was the steepest ever that came on top of two increases in a year.

The May 23 hike had come under sharp attack from all political parties including allies like TMC and DMK and some ministers in the UPA and there was all-round demand for a rollback.

The Left and NDA had on Thursday organised a nationwide strike in protest against the hike.

Last week's steep Rs 7.54 per litre hike was done considering an average gasoline price of USD 124.37 per barrel and a rupee-dollar exchange rate of Rs 53.17 in the first fortnight of May.

Gasoline price have since fallen to $115.77 per barrel in the second fortnight but rupee-dollar rate has worsened to Rs 54.96 to a US dollar during the period.

The fall meant that petrol rates be cut by Rs 1.68 per litre, excluding local sales tax or VAT. In Delhi, after including 20 per cent VAT, the reduction will be Rs 2.02 a litre.

Price may come down further in Delhi

The price of petrol which has come down to 71.16 per litre in Delhi could further decrease by 92 paise when a proposal by the Delhi government to cut VAT on increased component of the fuel comes into effect.

Petrol would cost Rs. 70.24 when the Delhi government implements its decision to forego VAT on the hiked price of the fuel.

Presenting the budget on May 28, 2012, Chief Minister Sheila Dikshit had announced slashing the VAT on the hiked price of petrol.

The budget will be taken up for passage on Monday and once proposal is cleared, the government would issue a notification effecting the cut in prices.

As per the earlier calculation, forgoing the VAT on increased price of petrol would have resulted a cut in petrol price by Rs. 1.26.

Source: The Hindu