The government has finally slashed the prices of petrol and diesel by Rs 5 and Rs 2 a liter, respectively. Revised prices would be effective from midnight. The step would help to control the inflation rate and increase demand in the economic system. However, the margin of oil marketing companies would decline just as it was starting to improve due to the decline in crude prices in the international market. OMC are likely to suffer a revenue loss of Rs.6,000 crore in the current fiscal due to the recent price revision.

Government was forced to slash the prices of petroleum products following the pressure by the major opposition parties. Transport industry and political parties have threatened to start agitation in the coming days in case the government fails to revise the prices for the sake of the common people. Interestingly, crude oil prices were at its lowest at $44 a barrel on Friday, giving enough room for the price revision. . However, Government has ruled out any possibility to revise the prices of kerosene oil and LPG gas, as companies are already suffering losses by selling these products on subsidized prices.

Union petroleum minister Murli Deora said that the step would help to increase the demand. Government may further revise the prices in line with the decline in the global prices of crude oil. Government is also likely to announce special package for industry on Saturday, to propel economic growth.