FLASH | Saturday, December 6, 2008 | Email | Print | 
Petrol price slashed by Rs 5, diesel by Rs 2 a litre
PTI | New Delhi
The Government on Friday announced a Rs 5 and Rs 2 a litre interim cut in petrol and diesel prices, respectively, in a move that will help put the lid on inflation and foster economic growth.
Indicating that further cuts were in the offing, Petroleum Minister Murli Deora told reporters after a meeting of the Cabinet Committee on Political Affairs that today's reduction was an "interim measure" and that the Government would continue to watch the global prices of crude oil.
Following the reduction that takes effect midnight tonight, petrol will cost Rs 45.62 a litre and diesel Rs 32.86 in the national capital. There is no change in the prices of LPG (cooking gas) and kerosene.
The Government had in June raised the prices of petrol and diesel by Rs 5 and Rs 3 a litre, respectively, and that of LPG by Rs 50 a cylinder to protect oil marketing firms against losses on account of a rally in crude prices.
The hike had then propelled inflation to double digits and stayed so for five months. Inflation cooled to 8.40 per cent as of November 22, but is still above the RBI's tolerance level.
Crude oil subsequently climbed to a record high of USD 147 a barrel in July, but has now come to USD 43.5, a four- year low.
"This (price cut) will help in reducing inflation," Deora said, adding that Prime Minister Manmohan Singh and Congress President Sonia Gandhi were committed to protecting the interests of the poor and middle-class.
On Saturday, RBI is expected to ease its monetary policy stance and signal banks to lower interest rates, which will make borrowings cheaper, increase spending and push economic growth.
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