Prior to the November 20 hike, petrol prices had been unchanged since September 22, while diesel rates hadn’t been changed since October 2.
According to sources in the finance ministry, during a recent meeting, the Department of Revenue even indicated that there is still some headroom for the government to increase petroleum taxes.
This is the first reduction in diesel price since mid-March when Indian Oil, Bharat Petroleum and Hindustan Petroleum froze rates for 82 days to adjust a record hike.
After a Cabinet meeting, Chief Minister Arvind Kejriwal said VAT on diesel would be brought down to 16.75 per cent from 30 per cent.
In the national capital, petrol price on Saturday stood at Rs 80.43 per litre and diesel at Rs 80.53 a litre, same level as the last four days when OMCs went for a pause and kept the prices unchanged.
While diesel price has been hiked for the 20th straight day, petrol price has been raised on 19 occasions in less than three weeks.
Diesel had for the first time become costlier than petrol in Delhi on Wednesday and has now crossed the Rs 80 per litre-mark.
The associations said they will hold a meeting and submit a memorandum to the Delhi government over the high VAT on the diesel price.
Over a 11-day period, the cumulative price of petrol has gone up by Rs 6.02 and diesel by Rs 6.4 per litre, a hike of 8.5% and 9.4% respectively in just 11 days.
No sense in increasing petrol, diesel prices when economy in shambles, roll them back: Sonia tells govt
In a letter to PM, Gandhi said she was deeply distressed that in these exceedingly difficult times, the government has taken the insensitive decision to increase petrol, diesel prices.
This is the third daily increase in rates in a row. Oil companies had on Sunday restarted revising prices in line with costs, after ending an 82-day hiatus.
While oil PSUs have regularly revised ATF and LPG prices, they had since March 16 kept petrol and diesel prices on hold, ostensibly on account of extreme volatility in the international oil markets.
Top finance ministry officials said the excess mop-up would be near Rs 2,000 crore for the rest of this month and about Rs 40,000 crore in a full year.
Petrol now costs Rs 70.14 per litre in Delhi, Rs 75.84 per litre in Mumbai, Rs 72.83 a litre in Kolkata and Rs 72.86 per litre in Chennai after the price cut.
On the decline since February 27, fuel prices have fallen by around Rs 5 a litre so far in 2020. Petrol and diesel prices are now at an 8-9 month low.