New Delhi, Oct 18: The Union Cabinet on Saturday deregulated diesel prices, besides approving a new gas pricing policy. The government move to deregulate diesel prices will result in a price cut of Rs 3.37 a litre with effect from October 19.
According to reports, the government approved to raise natural gas price to USD 5.61 per unit from November 1, and also decided that the rates will be revised every six months with the next revision being on April 1.
Finance Minister Arun Jaitely said the Cabinet in its meeting on Saturday decided to deregulate or free diesel prices, adding that retail rates will now reflect international movement in oil prices.
This would result in reducing the diesel price by Rs 3.37 a litre with effect from October 19. This is the first reduction in diesel rates in over five years.
It may be noted that diesel rates were last cut on January 29, 2009 when they were reduced by Rs 2 a litre to Rs 30.86. Diesel prices were last raised by 50 paisa on September 1 and cumulatively risen by Rs 11.81 per litre in 19 instalments since January 2013.
There couldn’t have been more opportune time for the decision. Oil prices are near a four-year low and two major state elections are out of the way.
Reserve Bank Governor Raghuram Rajan has recently called on the government to “seize this moment”, while inflation is the lowest in five years and refiners are selling at a profit for the first time ever.
(With Agency Inputs)