Petrol price cut ahead of polls, diesel price cut held back

State-run oil marketing companies (OMCs) on Tuesday announced a Re1 per litre reduction in the retail price of petrol, but held back the first reduction in diesel rates in over five years till the completion of the assembly polls.

The retail price of diesel is likely to be cut by Rs2.50 per litre after the ongoing elections to state assemblies in Maharashtra and Haryana. The petroleum minister had said earlier that any reduction in diesel price would be announced only after the poll code is lifted on 19 October

OMCs, which cut petrol price by 54 paisa on 1 October, reduced rates by another Re1 per litre, excluding local sales tax or VAT, with effect from Wednesday, Indian Oil Corp (IOC) announced on Tuesday.

The price revision was due Wednesday evening but was announced ahead of polling in Maharashtra and Haryana.

After accounting for the incidence of local sales tax, petrol rate in Delhi was reduced by Rs1.21 a litre to Rs66.65 per litre, according to Indian Oil Corp (IOC), the nation's largest fuel retailer.

In Mumbai, petrol price was cut from Rs75.73 to Rs74.46 per litre.

With global crude prices falling to levels around $85 a barrel, OMCs are likely to reduce fuel prices further.

The continued low global oil prices would allow the government to breathe easy as the macroeconomic environment improves substantially. But the centre has not said anything about deregulating diesel pricing and instead is opting to cash in on the fall in crude prices.