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In bold reforms, the government today moved towards deregulating diesel when it raised prices by 51 paisa per litre and planned similar monthly hikes in future to cut record subsidies.
This was coupled with a decision to charge bulk consumers like defence, railways and state transport undertakings market price which is almost Rs 10 a litre more than retail selling rate, to save an estimated Rs 12,907 crore in annual subsidy.
As a sweetener to the bitter pill, the Cabinet Committee on Political Affairs chaired by Prime Minister Manmohan Singh bowed to public pressure to raise the cap on subsidised LPG to nine cylinders per household from six.
State-owned oil companies in a parallel cut petrol price by 25 paise a litre in view of softening in global oil rates.
The decisions on diesel rate increase for retail and bulk consumers will cut subsidies by about Rs 15,000 crore on an annualised basis and by Rs 3,400 crore in remainder of FY'13.
While the base hike in diesel price was 45 paisa, it will lead to an increase of 51 paisa in Delhi after including local VAT. New rate of Rs 47.66 a litre will be effective from midnight tonight.
Similarly, while the base rate cut on petrol was 25 paisa, it will translate into a reduction of 29.75 paisa in price in Delhi to Rs 67.27 a litre with effect from midnight tonight.
While subsidised LPG rates haven't been increased, non-subsidised cooking gas which consumers will buy beyond their new entitlement of 9 cylinders, will cost Rs 46.50 more at Rs 942 per 14.2-kg cylinder.
Bulk users, which consumer around 17.77 per cent of the total diesel sales in the country, will pay Rs 56.88 a litre in Delhi with effect from midnight tonight. These rates would be revised on 1st and 16th of every month based on previous fortnight average oil cost. The same is the methodology followed for pricing of jet fuel (ATF).
Prices vary from city to city due to differential local sales tax or VAT rates.
In bold reforms, the government today moved towards deregulating diesel when it raised prices by 50 paisa per litre