Diesel Prices Likely To Be Cut By Re.1 Per Litre, Petrol By Rs1.75

This would be the first reduction in diesel rates in over five years. Diesel rates were last cut on 29 January 2009 when they were reduced by 2 a litre to 30.86. Since then, rates have only increased as international oil prices climbed. Since January 2013, diesel prices have been raised by up to 50 paise a litre every month to eliminate under-recoveries. Like diesel, state-owned oil companies had also not changed petrol prices on 16 September, though it warranted a 54 paise increase as its benchmark gasoline rates had firmed up in international market. This is perhaps the first time that retail prices in India are higher than global rates.

Oil companies calculate the desired retail selling price of petrol and diesel on 1st and 16th of every month based on average international benchmark price and rupee-dollar exchange rate. The next revision in diesel and petrol prices is due on Tuesday. Originally, petrol and diesel prices were deregulated in April 2002 when NDA government was in power.

Administered pricing regime, however, made a back-door entry towards the end of NDA regime in the first quarter of 2004 when crude prices started inching up. Congress-led United Progressive Alliance (UPA) controlled rates as international oil prices went through the roof.

In June 2010, however, it freed petrol prices from its control and rates have since then moved more or less in tandem with cost. In January 2013, the UPA decided to deregulate diesel prices in stages through monthly hikes of 50 paise per litre. Rates were last raised on 31 August after which losses have been wiped out. Rates have cumulatively risen by 11.81 per litre in 19 instalments since January 2013.