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INDIA BUSINESS WORLD - November 16th December 31st 2008
PETROL GETS CHEAPER BY RS 5, DIESEL BY RS 2
THE government has slashed prices of petrol and diesel by Rs 5 and Rs 2 a litre respectively—the first reduction in more than two years. The price cut, comes as a relief to fuel consumers and may help tame inflation and boost demand in the economy. On the flip side, the cut will reduce the margins of oil companies which had just started improving with the fall in crude oil prices.
The announcement by petroleum minister Murli Deora comes ahead of a demand-booster package and a possible rate cut by the Reserve Bank of India. Mr Deora told reporters after a meeting of the Cabinet committee on political affairs that the reduction was an “interim measure” and that the government would continue to watch the global prices of crude oil and react accordingly.
Mr Deora said: “We have kept prices of kerosene and cooking gas untouched as oil companies continue to incur losses on these.”
International crude oil prices slumped to nearly $40 a barrel after it was reported that 533,000 jobs were lost in the US in November, raising prospects of a steep drop in energy demand. Crude prices are now at a fouryear low and about a third of the all-time peak of near $150 a barrel in July.
Domestic consumers have seen a steady rise in household budgets over the past year.
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