Diesel to cost Rs.3 more, petrol dearer by Rs.5 (Second Lead)

June 4th, 2008 - 2:34 pm ICT by IANS  

A file-photo of Manmohan Singh

New Delhi, June 4 (IANS) Deciding to bite the bullet in spite of political opposition, India’s cabinet Wednesday decided to allow a hike in the price of diesel by Rs.3 per litre, petrol by Rs.5 and cooking gas by Rs.50 per cylinder. “The decision will take effect from midnight tonight,” Petroleum Secretary M.S. Srinivasan told reporters here after a marathon meeting of the Cabinet Committee on Political Affairs, presided over by Prime Minister Manmohan Singh.

Normal unleaded petrol is now expected to cost Rs.50.52 per litre in the national capital and Rs.55.51 in Mumbai, while diesel is expected to retail at Rs.34.76 and Rs.39.08, respectively, in the two metros.

The meeting also decided to bring down customs duty on crude oil to nil from five percent earlier, as also on diesel and petrol to 2.5 percent from 7.5 percent. Excise will also be lowered by Rs.1 per litre on the two products.

Officials said the prime minister would explain to the nation later Wednesday the rationale behind the hike. State-run oil retailing firms were bleeding since they were having to sell fuels at rates below cost despite crude prices hitting the roof.

Prices of petrol and diesel were last raised in India in February after close to 20 months. At that time crude oil prices were ruling at $67 per barrel, as against $125 now.

The crucial meeting was attended by Petroleum Minister Murli Deora, External Affairs Minister Pranab Mukherjee, Defence Minister A.K. Antony, Finance Minister P. Chidambaram, Railway Minister Lalu Prasad and Transport Minister T.R. Baalu.

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