But the possible reduction has now been negated as the the government decided to raise excise duty to shore up its revenue.
Excise duty on normal or unbranded petrol was hiked from Rs 1.20 per litre to Rs 2.70 per litre and unbranded diesel from Rs 1.46 a litre to Rs 2.96, a government notification said.
The same on branded petrol was raised from Rs 2.35 a litre to Rs 3.85 and on branded diesel from Rs 3.75 to Rs 5.25 per litre.
While the excise duty hike will result in an immediate increase in both petrol and diesel prices, the expected reduction would keep the retail rates at almost the same levels.
There is also a possibility of state-owned oil firms preponing the planned review of fuel prices due on Saturday to make the whole exercise price neutral for consumers.
Before the duty hike, petrol cost Rs 64.25 a litre in Delhi and diesel Rs 53.35 a litre.
While the fall in global rates and the resultant cuts in retail prices had led to loss of revenue to the exchquer, particularly, for state governments, there wasnt any loss to the Central government on account of reduction in petrol and diesel prices as excise duty on the two fuel is fixed and not ad valorem.
Unbranded petrol currently attracts a basic excise duty of Rs 1.20 per litre, a special additional excise duty of Rs 6 a litre and a road cess of Rs 2 per litre. Unbranded diesel attracts a basis excise duty of Rs 1.46 a litre and road cess of Rs 2 per litre.
The total excise duty on unbranded petrol will rise from Rs 9.20 to Rs 10.70 per litre and than on unbranded diesel from Rs 3.46 to Rs 4.96 per litre.
Branded petrol currently attracts an excise duty of Rs 10.35 per litre which would go up to Rs 11.85 per litre and that on branded diesel from Rs 5.75 to Rs 7.25 per litre.