Petrol, diesel to be cheaper by Rs 2

After today's reduction, petrol price has been cut by Rs 12.27 per litre cumulatively since August

Petrol and diesel prices were cut on Monday by Rs 2 per litre each as international oil prices slumped to five-year low.

This is the eighth straight reduction in petrol prices since August, and fourth in diesel since October. New rates will be effective midnight tonight, Indian Oil Corp, the nation's largest fuel retailer, announced in New Delhi.

In Delhi, petrol will cost Rs 61.33 a litre, the lowest in 44 months, as compared to current price of Rs 63.33. The price has been cut by Rs 2.09 a litre in Mumbai to Rs 68.86.

Rates differ from state to state because of varied rates of local sales tax or VAT.

Diesel will cost Rs 50.51 a litre in Delhi, the lowest since July 2013, as against Rs 52.51 currently. In Mumbai, it will cost Rs 57.91 per litre as compared to Rs 60.11.

The rate cut would have been steeper but for the government deciding to make hay out of the crude oil rate slump to $62.37 per barrel by raising excise duty on petrol by Rs 2.25 and by Re 1 a litre on diesel.

Crude oil price in June was $115 per barrel.

The prices of petrol and diesel were last revised downwards on December 1 by 91 paisa a litre and 84 paisa per litre respectively (including state levies at Delhi) on the back of declining international oil prices.

After today'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 a litre when the government decided to deregulate the fuel. This was followed by a Rs 2.25 a litre 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.

There would have been another reduction on November 15 but the government mopped up, raising excise duty on petrol and diesel by Rs 1.50 a litre each.

In the two excise duty hikes, the government has raised its revenue by Rs 10,600 crore (Rs 106 billion) this fiscal.