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.
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.
The TDP supremo alleged that the prices of essentials are spiralling due to the Andhra government’s negligence.
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.
The statement came on a day oil companies raised petrol and diesel prices by 48 paise per litre and diesel by 23 paise a litre.
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.
Party’s state unit says the hike will negatively impact the poor, farmers and transporters
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.
An official explained that the government revised the taxes following a dip in revenue from petrol and diesel following the decline in crude oil prices in the international market.
Petrol and diesel in India have declined by nearly 15 per cent each from the record high levels they had reached in October.