A second meeting regarding the freeing of the oil prices was held by the Empowered Group of Ministers today, which was headed by Finance Minister Pranab Mukherjee in which they gave a green signal for an increase in petrol prices by Rs 3.50 per litre.
This move by the government is as part of a plan to move towards a market-determined fuel price regime.
Meanwhile, Oil Secretary S Sundareshan stated that the panel also okayed Rs 3/litre hike in kerosene, Rs 35 in LPG and Rs 2/litre in diesel.
However, the revised prices to be effective from midnight.
He added that the government will have the full authority to interfere if crude prices increase sharply.
In the meantime, no decision has been taken on duty on oil products.
The EGoM agreed to free diesel prices partially. However, petrol prices have been deregulated.
Earlier, the oil Minister Murli Deora has asked states like Delhi and Andhra Pradesh to lower sales tax (VAT) on auto fuels and shift towards specific rates in a bid to lower the impact of an unavoidable hike in petrol and diesel prices.
Deora had written to the state chief ministers seeking reduction and rationalization of sales tax/VAT as the government's consideration to free petrol and diesel prices may result in a rate hike of up to Rs 3.8 a litre.
He further wrote that a rise in the international oil prices exerts an upward pressure on domestic prices of petroleum products and also mentioned that the Ad valorem rates of VAT imposed by the state government would further aggravate the impact of international oil prices on the consumers.
Previously, Planning Commission Deputy Chairman Montek Singh Ahluwalia on June 7 in front of the meeting of a ministerial panel on fuel prices spoke in favour of a hike in petrol and diesel rates.
He further added that for a period of six months, he has been saying that there should be a hike and when asked whether this is the right time to increase fuel prices he replied that he still hasn't changed my mind has still believes there should be a hike in the fuel prices.
The Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, is meeting today that is on the 8th of June to consider the Kirit Parikh Committee report that speaks about calling for freeing the petrol and diesel prices from government control and in addition to that it also speaks about a steep hike in LPG and kerosene rates in order to cut the subsidy bill.
Ahluwalia had earlier, told that the India's international economic reputation requires us to say that fuel prices are going to be linked to global prices.
He believes that the linkage of fuel prices with that of global prices is unavoidable.
The state owned Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum are currently losing Rs 203 crore per day on selling the fuel below the imported cost.
The company's were currently selling petrol at a loss of Rs 3.35 a litre, while the loss at which they are selling diesel is Rs 3.49, the loss for PDS kerosene is Rs 18.82 and it is Rs 261.90 for every 14.2-kg LPG cylinder.