New Delhi: The union government is likely to reduce fuel prices by up to 11%, its second cut in nearly two months, as crude oil’s $100 fall since July helps the government please buinesses and voters ahead of elections.
Petrol prices, currently Rs45.62 a litre in New Delhi, are likely to fall by Rs5, or 11%, while diesel, sold at Rs32.86 a litre, may be cut by Re1 a litre, or about 3%, a government official, who did not want to be identified, told reporters.
The government is also considering a new mechanism for fuel pricing, he said, but did not elaborate.
The Cabinet Committee for Economic Affairs (CCEA) is likely to meet on Wednesday evening, when a decision could be made.
The government had last cut petrol prices on 5 December by Rs5, and diesel rates by Rs2 a litre.
Lower oil prices in a slowing economy have helped India’s inflation rate drop to 5.6% after it galloped to 13-year high of 12.9% in August.
On Tuesday, Sonia Gandhi, chairperson of the Congress-led United Progressive Alliance, or UPA, said prices of petroleum products are likely to be reduced soon, a step that will help bring down inflation rate further.
“The prices of petroleum products have decreased recently and I expect that soon they will dip further,” she said.
Gandhi said that despite a steep hike in the prices of international crude oil, “the government kept it under control in the country by extending subsidy of Rs1 lakh crore”.