In yet another bid to contain spiralling inflation, which touched 6.73 cent according to the latest weekly data, the government on Thursday reduced the prices of petrol and diesel by Rs 2 and Re 1 respectively.
Petrol will now cost Rs 42.85 a litre and diesel Rs 30.25 a litre. The new prices are effective from midnight.
The reduction, the second in less than three months, was decided upon at a meeting between Prime Minister Manmohan Singh, Finance Minister P Chidambaram and Petroleum Minister Murli Deora.
Singh affirmed that inflation fears had prompted the cutback. “As far as inflation is concerned, we are adopting a multi-pronged strategy,” he told reporters on Thursday. “You must have noticed that the prices of diesel and petrol have come down. I can confirm that within a few weeks you will see the results.”
Chidambaram too admitted that the price rise was pinching people. “The increase in prices is not seasonal alone. This is more than seasonal, which is causing present disturbance in the price situation. It is affecting the common citizen,” he said.
The government has already taken a series of steps in recent weeks to control inflation. Apart from squeezing money supply by raising interest rates, it announced import-duty cuts on a wide range of items — from cement to capital goods, chemicals to metals — in an attempt to lower manufacturing costs that push up inflation.
The Reserve Bank of India’s short-term lending rate for banks too has been raised four times in the current financial year.