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The first option before the Cabinet Committee on Political Affairs was that petrol and diesel pricing “may be freed that is, removed from government control with immediate effect” while retaining government hold on fixing kerosene and cooking gas LPG prices.
While giving the power to state-run oil marketing companies to fix prices, this option would have meant a cut of Rs 14.89 a litre on petrol and Rs 3.03 per litre on diesel.
The CCPA today chose the second option: A reduction of Rs 5 per litre on petrol and Rs 2 per litre on petrol with no change in retail prices of kerosene or LPG where OMCs continue to lose Rs 17.26 per litre and Rs 148.32 per cylinder respectively.
“This was chosen as it garners profit for the OMCs in the last five months of the fiscal year and pares the burden on the government which has to meet part of the under-recoveries by issuing bonds,” sources said.
It also gives the Centre the option to re-calibrate prices depending on how global price of crude oil behaves in future, they said. This was also indicated by Petroleum Minister Murli Deora who said that today’s reduction was an “interim measure”.
The three OMCs Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum are now estimated to lose Rs 1.11 lakh crore in fiscal 2008-09 with largest chunk of Rs 96,000 crore in the first half of the fiscal. They started making the profits on both auto fuels from November but today’s cuts would take away Rs 5,3000 crore.
Sources said that the price reduction had the consent of Congress chairperson Sonia Gandhi and has been timed to bolster the feel-good factor that is being ushered tomorrow with a fiscal relief package to boost the slowing economy.
Today’s price cuts would provide an extra Rs 6,000 to the people who could use it for other consumer goods. It would also help lower the inflationary pressure on the WPI where Fuel, Power, Light & Lubricants Group has 14.23 percent weight.
In June, the government raised the price of petrol by Rs 5 per litre, diesel by Rs 3 per litre and domestic LPG by Rs 50 per cylinder due to the high international prices of crude oil that touched a peak of $147 a barrel mid-July. Since September, crude prices started sliding and are now at a four-year low of $43.5 a barrel but the government could not revise prices downwards as the Model Code of Conduct was in force.
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thanks for the government bcs it's a great news especially 4 d youth so,i can rome with my girlfriends on my bike with low cost and more profit,till yet i had to think abt d petrol prices thanks india,lage raho india bhai.
As of today, crude offers are at40.81, January delivery. Proportionately, India's basket could be at $38. US recession has dipped Gasolene quotations by 40 pct., and forecasters see possiblity of recession driven prices at $25 p. bl. in 2009. Government should utilise these environs to arrive at a system for self-market derivedd oil pricing ., so that consumers can also get the benefit of genuine competition, as this will bring in the private refiners also. And ,Subsidies must go through government account, not oil co's, for which a separate pool could be created. Hiding behind Oil Bonds, cross subsidies and out of budget debits should be taboo.
Another bad alternative , choosen by the goverment of 60's mindset!!!
Petrol price has been reduced by Rs.5 and Diesel by Rs.2. Will the price of the so called essential commodities will be reduced by themanufacturer/distributors/whole seller/retailer. The printed MRP never gets changed downward. It get changed to upward direction only. ST bus fare was increased after the diesel price hike. Are they going to reduce the fare. Where will the effect of change come ? It will definitely will come to the common man.
Great move by govt. Even though oil companies have huge oil losses and ideally govt could have waited a little longer but this ensures some relief to common man. Also, in India due to reasonable/unreasonable political pressures, this had to be done..LPG and Kerosene still have huge subsidies so that has to be balanced out by govt. Asking for LPG price reduction makes no sense due to subsidies already in place.
Thats a good news for Indians but LPG rates should also decrease.
Why Rs:5 and 2 only, the present price is at the time of $150 to 160 per barrel crude oil, and now the crude oil is $44 only, on what basis the Govt reducing Rs:5 and 2, oil companies also recover their loses, the Govt should reduce Rs:15 to 20.
the government has embarked on an election mode - its pretty much total, and a desperate act. they will ensure the oil companies will be buried next to where the oil comes from. we have to phase out subsidies. our poorer neighbours like pakistan and bangladesh dont have subsidies!
Unacceptable.When the rate of crude oil was going up Govt. enhanced the rate to maximum.Now, the oil rate is 1/3 of the last high but the reduction is so little.This Govt will not last in the next election.The increse
government could not revise prices downwards as the Model Code of Conduct for elections bars it from making any announcement that could be seen as appeasing vote is a lame excuse to allow oil companies earn profits in crores. Being an essentail consumable item, the code of condcut shall not be applicable in this case. If Govt announces any concessions like free issue of TV or Computer, with the intention of gaining vote bank then the sahll be applicable. So, Govt enjoyed maximum advantage of election scenerio.
good act by govt i wish them to sucessive continue
Nice step by Government behalf of people needs, but in ways to politics, they do some late in decision, by seeing elections in Rajasthan
What a poor decision. The Govt should should not cut fuel price at least upto Mar'09
When the price is between from $47 to $120, that time govermnet increase the petrol
last time when crude was $45 pb and USD was around 48-49, petrol prices in India was around Rs. 40/-, Are your planning to compensat fisacl deficit with Public money?
Its very poor decision by Goverment, as decision is taken considering FELL GOOD factor. As UPA is backfoot because of failur in national Security Mumbai Terror Attacks. Simply to catch the vote bank. No one think for oil companies who had sustained huge losses. Goverment must allow oil companies to recover the losses. Now what will be benifits for common man, eventhough prices are reduced no one will reduce the prices of their services which are already increased wrt to crude oil. One another failure of UPA goverment.
Too late too little they should not wait for mkts to further crash we can sit and keep on waiting hammering once in a day , it needs to cut fuel price by atleast Petrol 10, Diesel 5, then only the effect will show at the same time club it will interest rates and ecxise rate cuts to facsilitate movement in market and properties. Then Indian market obviosly will start moving . Doing in intallment may drain the effort as it needs to hammer out from the minds that there is a recession . Indian market has the size to bear and exhost the total strength of the Indian industry so the need is to immidiately take action and not to do it in small installment. Dont wait for lacs of people getting jobless once big job cuts starts it would be very tough to change the mood.The gov. is not interested to part their earnings because they want big money spending so that they can spin off more money .But once mkt down they will also suffer. For god sake do it fast and enough.
price reduction is a publicity stunt at the time of coming elections. regarding LPG gas nothing is sure of price reduction.Government is worried about terrorist and not of common mans problems.Still more reduction has tobe done in petrol prices when world prices are coming down....
great. this was the need of the hour, felt much before the formal announcement.
The decrease in petrol price is not sufficient according to the price cut on crude oil.It should be atleast Rs.10 on petrol,Rs.5 on diesel and Rs.50 on cooking gas.
There should have been no decrease in the prices - till the government bonds issues have been fully redeemed to reflect the losses incurred when oil price was high and petrol price was not high enough. This is grave injustice to future generations. This is exactly the type of short term optimization which we fall prey to - which prevents long term good for this country. In addition - anyone asking for LPG price cut is out of their mind. 90% LPG consuming household in this country have cable TV connection. I cannot believe that - they dont mind paying Rs 350 for cable tv, but not the fair price for cooking fuel.
Atleat now they have taken the decision about the petrol and diesel price.
I appreciate the price reducing of petrol and diesel, people expect more decrease on petrol can be possible , but it not justifiable as Govt. already lossing in kerosene and LPG cylinder
ther should be more decreses in diesil prices as this may lead to decreses in general products which is used by commom citizens
CUT IN PETROL RS.5/- PER LITRE AND DIESEL RS.2/- PER LITRE EFFECTIVE FROM SATURDAY THE 6TH DEC 08 HAS BEEN ANNOUNCED WHILE THAT OF LPG HASREMAINED UNCHANGED. IT IS A GREAT AND GRAVE INJUSTICE DONE TO MN.OFLPG USERS WHEN IT SHOULD HAVE BEEN ANNOUNCED ALONGWITH THE PETROL