New Delhi:State-run Indian Oil Corp. Ltd (IOC) on Thursday reduced diesel and petrol prices by 5 paise and 7 paise per litre, respectively, after automobile fuel prices reached a record high on Tuesday.

The price cut followed the state-run fuel retailers’ move of reducing petrol and diesel prices by 1 paisa per litre on Wednesday which was mocked by the opposition. Also, the Left-front government in Kerala on Wednesday announced a cut in fuel prices by Re1 per litre from Friday, scoring a political point against the centre amid record prices. “Another second anniversary gift to people: The sales tax on petrol reduced by 1.69% and diesel by 1.75% in Kerala. The retail prices to decline by 1 Rupee…Now will PM Modi be willing to roll back his tax hike?" Kerala’s finance minister Thomas Isaac tweeted on Wednesday.

Diesel and petrol prices in Delhi on Thursday were Rs69.25 per litre and Rs78.35 per litre, respectively, at IOC outlets. Retail prices of petrol and diesel in India track global prices of these auto fuels, not crude, though they are broadly linked to crude oil price trends, which have firmed up.

With the dynamic fuel pricing introduced in June last year, the National Democratic Alliance (NDA) government has maintained that it has no role in pricing. Petrol prices were deregulated in June 2010 by the Congress-led United Progressive Alliance (UPA) government. The Prime Minister Narendra Modi-led NDA government decontrolled diesel prices in October 2014.

These two days of minor price reduction followed hikes in prices everyday since 14 May in the backdrop of three state-run firms—IOC, Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL)—refraining from increasing prices since 24 April and pausing it while the Karnataka election campaign was going on.

With fuel prices reaching a record high in India, there has been a demand for an excise duty cut on petrol and diesel ahead of the 2019 general election. However, the NDA government has signalled its intent to stay the course on fuel pricing reforms and said that it was working toward a “long-term solution".

The Opposition has been trying to corner the government on the issue.

“Congress party will fight in Parliament and on the streets until fuel prices are reduced. The government is liable to bring petroleum products under GST," former Union minister and senior Congress leader R.P.N. Singh said on Wednesday.

The Centre is in favour of bringing petroleum products under the new indirect tax regime. At present, petroleum products are included under the goods and services tax (GST), in line with amendments to the Constitution. But GST will start to be levied on petroleum products only once the GST Council—the representative body comprising the Union and state finance ministers—approves the move.

The price reduction on Wednesday and Thursday came after the Organization of the Petroleum Exporting Countries (Opec) and Russia agreed to ease crude oil supplies. There has been a rally in oil prices due to a combination of factors such as US President Donald Trump pulling his country out of the 2015 nuclear accord with Iran, Opec and Russia cutting supplies, falling production in Venezuela and geopolitical tensions.

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