Government of India is planning a big reduction in diesel prices ahead of Polls in Maharashtra and Haryana. OMCs are also preparing to slash petrol prices by 50 paise. If reports are to be believed, diesel prices may be reduced by about Rs. 2 per litre next week. It will be the first diesel price cut since January 2009.
The reduction of Brent crude oil to a 14 months low of $96.7 per barrel in this month is the main reason behind this big decision of reducing diesel prices. Currently, the domestic diesel price is around Rs. 2 per litre more than the expected market price. Speaking to ET, ministry source said, “The government plans to take a view on reducing its price after the routine price review, which is scheduled at the end of this month.”
The reduction in diesel prices would increase the demand for oil burners, which has witnessed a sharp decrease in demand in recent past. Interestingly, the narrowing price gap between petrol and diesel has raised the demand for petrol cars. Top selling petrol cars in the market have seen a sharp increase in buyers, and bear a waiting period of around 3-4 months. For instance, the diesel cost Rs. 58.97 per litre while the petrol cost Rs. 68.51/litre for Delhi buyers. The decrease in prices will further widen the gap between petrol and diesel.
