Weaker rupee may reflect in next fortnightly pricing cycle.
In a trend reversal, oil marketing companies have cut petrol prices by Rs 2.22-2.35 a litre with effect from midnight on Tuesday.
The decrease more than negates the impa
ct of the last price hike of Rs 1.80 earlier this month. The hike had triggered strong political criticism. UPA ally TMC had even threatened to withdraw support to the government.
This will be the first price cut since January 2009 and also the first cut since the automobile fuel was decontrolled in June last year. Companies, however, caution the impact of a depreciating rupee yesterday and on Tuesday may cause another hike next month. The new price of petrol will be Rs 66.42 a litre in Delhi (lower by Rs 2.22), Rs 70.84 in Kolkata (Rs 2.31), Rs 71.47 in Mumbai (Rs 2.34) and Rs 70.38 in Chennai (Rs 2.35).
The country’s biggest petroleum marketer, IndianOil, said the reduction had been possible as a result of the favourable impact of a slide in international prices and rupee/dollar movement. “IndianOil (and other companies) review petrol prices on a fortnightly basis. Based on the review, prices are fixed for the next fortnight. In keeping with this practice, the company has reviewed the pricing cycle as prevalent in the last fortnight. The review reveals at the current prices, there will be an over-recovery of Rs 1.85 a litre. It has, therefore, been decided to revise prices downwards by Rs 1.85 (excluding state taxes and levies) from November 16,” said a company statement.
The rupee/dollar exchange rate, which had inched higher in the second fortnight of last month, came down marginally and remained more or less stable in the vicinity of 49.30 in the first fortnight of this month. Notably, the rupee suffered significant depreciation yesterday and on Tuesday. It touched a 32-month low to close at 50.67 on Tuesday. That may reflect in the next price cycle.
