Zee Media Bureau
In a bold reform decision, the government on Saturday decided to deregulate the price of diesel with immediate effect, leading to a fall of Rs 3.37 per litre with effect from midnight tonight.
"Price of diesel will be linked to the market, and therefore, depending on whatever is the cost involved, is the cost element consumers will have to pay," Finance Minister Arun Jaitley told the media.
The Rs 3.37 per litre cut in prices of diesel, triggered by falling global oil prices, will help ease inflation that has already fallen to a multi-year low.
"We have decided to reduce prices and in Delhi, prices are likely to go down by Rs 3.37 a litre from midnight tonight," said B. Ashok, chairman of Indian Oil Corp, the country`s biggest fuel retailer.
With crude prices dipping to four-year low, the over-recovery or profit on diesel sales, which was Rs 1.90 a litre in first half of October, has now climbed to Rs 3.56 per litre.
State-owned fuel retailers made their maiden profit on diesel in second half of September with a modest over-recovery of 35 paise. This swelled to Rs 1.90 in first half of October and stands at Rs 3.56 per litre now.
But under-recoveries continue on kerosene and LPG.
"In the case of PDS Kerosene and Domestic LPG, the under-recoveries for the 2nd fortnight of October 2014 will be Rs 31.22 per litre (Rs 32.67 per litre in last month) and Rs 404.64 per cylinder (Rs 427.82 per cylinder in last month), respectively," an official statement said.
State-owned fuel retailers - IOC, BPCL and HPCL are losing about Rs 139 crore a day on sale of PDS kerosene and domestic LPG. This is lower than Rs 156 crore daily under-recoveries during previous fortnight, it said.
With agency inputs
