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Announcement The Indian government on Friday cut the prices of petrol by Rs. 5 and diesel by Rs. 2 per litre respectably as an interim measure to give some relief to the ‘aam janta’ of India in the wake of falling international crude oil prices. Petroleum Minister Murali Deora told that this price reduction is an ‘interim measure’ and government would take further decisions by keeping an eye on the global prices of oil. The reduction will take effect from Friday midnight. With this reduction petrol will cost Rs. 45.62 a litre and diesel Rs. 32.86 in the national capital Delhi. But government has not changed the prices of LPG (cooking gas) and kerosene.

Earlier Prices Crude oil prices had touched the USD 150 a barrel mark in July putting the Indian oil companies in a very tight position. They were facing huge losses because of subsidies. To stabilize their position and end their cash crunch government of India had increased the prices of oil in June. Government had raised the prices of petrol and diesel by Rs. 5 and Rs. 3 a litre, respectively. The price of LPG was raised by Rs. 50 per cylinder. When the UPA government had took over from the NDA government the crude oil price in the International market was around USD 70 a barrel. But now it has fallen to the record low of USD 43.5 a barrel. If compared with the earlier crude oil prices, the present price reduction is very less.

Inflation Some leading news papers of India had published the news on Friday that government is thinking to reduce the prices of petrol and diesel by Rs. 10 and Rs. 5 a litre respectively and of LPG by Rs. 50 a cylinder. Falling oil prices will bring the inflation down and will give a big boost to the economic growth rate. With the reduced prices, the prices of some essential commodities will come down thus giving a big relief to the poor and lower sections of the society. It must be learnt that a few weeks ago, inflation had crossed the 12 per cent mark and Manmohan Singh led UPA government was being criticized by all the sections of the society for its failure to check the prices. But in November prices started to fall that decreased the inflation rate.

Public Global economic crisis caused the downfall in crude oil prices in the international market thus giving a big relief to the oil importing countries. Indian government was ready to reduce the oil price during the month of November but it had to wait because of election code of conduct in wake of assembly elections in some states. Because of Mumbai terror attack, UPA government it in a very tight position and the oil price reduction will save it from the public wrath to some extent.