result of the two decisions would be a cut in subsidy by about Rs 5,000 crore.
Before yesterday's decision, the oil firms had projected to lose Rs 1,56,601 crore in revenue on sale of diesel, LPG and kerosene at below market prices.
Butola termed the government decision as "practical and pragmatic" and said the oil companies will review diesel prices every month and take decisions on raising prices "based on ground realities".
He did not elaborate.
While the base hike in diesel price was 45 paisa, it will lead to an increase of 50 paisa in Delhi after including local VAT. It is costing Rs 47.65 a litre from today as against Rs 47.15 previously.
Similarly, while the base rate cut on petrol was 25 paisa, it will translate into a reduction of 30 paisa in price in Delhi to Rs 67.26 a litre.
Prices vary from city to city due to differential local sales tax or VAT rates.
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.
While bulk diesel rates will be revised on 1st and 16th of every month based on previous fortnight average oil cost, the price of non-subsidised LPG would be changed once a month.
Butola said the hike in diesel price will help neutralise the Rs 10,000 crore hike in bill to subsidise domestic cooking gas (LPG) whose rates along with kerosene have been untouched.
The price cut in petrol, which was deregulated in June 2010, is the first revision since November and was announced by oil companies independent of the government decision.
Previously, petrol price was cut twice in October and November - first by 56 paise and then by 95 paise per litre.
Price of diesel was last revised on September 14 when it was hiked by a steep Rs 5.63 per litre. Kerosene rates have not changed since June 2011 and it currently costs Rs 14.79 per litre in Delhi.
Subsidised LPG costs Rs 410.50 per 14.2-kg cylinder and any household requirement beyond the new cap of 9 cylinders will have to be bought