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The Diwali morning has brought an early sparkle for fuel consumers as retail prices of petrol and diesel fell between Rs 5-10 per litre on Thursday in line with the Centre's announcement to cut excise duty on the two petroleum products to contain surging rates.

Accordingly, the pump price of petrol in Delhi fell to Rs 103.97 a litre at 6 a.m. on Thursday from the previous day's level of Rs 110.04 a litre. The diesel prices fell by a bigger margin to Rs 86.67 a litre in the city from the earlier level of Rs 98.42, according to a price notification of state-owned fuel retailers.

In the financial capital Mumbai, petrol prices fell to Rs 109.98 a litre from Rs 115.85, while diesel fell to Rs 94.14 a litre from Rs 106.62, which was also the highest among all metros.

Across the country as well, fuel prices fell between Rs 5-10 per litre after the Centre on Wednesday announced that the excise duty will be reduced by Rs 5 for petrol and Rs 10 for diesel from November 4.

The cut is larger in some states such as Uttar Pradesh and Goa which have also announced VAT cut on petrol and diesel.

The Centre has said that massive reduction in excise on diesel will come as a boost to the farmers during the upcoming Rabi season. It would lose revenue to the tune Rs 40,000-45,000 crore in balance period of FY22 due to excise reduction.

Before Thursday's price fall, there was a pause on fuel price increase on Wednesday but petrol and diesel prices had spiked for seven consecutive days prior to this to take up the retail rate of petrol by Rs 2.45 per litre in Delhi.

Similarly, diesel prices also increased in last week by Rs 2.10 a litre.

Diesel prices have increased on 30 out of the last 41 days taking up its retail price by Rs 9.90 per litre in Delhi before Thursday's cut.

The fuel is available at over Rs 100 a litre in several parts of the country and even after the cut it is above this level in several parts of the country.

Petrol prices had maintained stability since September 5 but oil companies finally raised its pump prices last week and this week given a spurt in the product prices lately.

Petrol prices have also risen on 28 of the previous 37 days taking up its pump price by Rs 8.85 per litre.

Since, January 1, 2021, the fuel rates have risen by more than Rs 26 a litre before the duty cuts.

Crude price has been on a surge rising over three year high level of over $85 a barrel now as global demand remains firm while OPEC+ continues to move s lowly on increasing production. It has fallen to around $82 a barrel after China released some oil from its reserve to address supply concerns and exp ected rise in OPEC production.

Since September 5, when both petrol and diesel prices were revised, the price of the two fuels in the international market is higher by around $9-10 per barrel as compared to average prices during August.

The excise duty cut by the Centre is first such exercise since the onset of Covid pandemic early last year.

In fact, the government had revised excise duty on petrol and diesel sharply in March and again in May last year to mobilise additional resources for Covid relief measures.

The excise duty was raised by Rs 13 and Rs 16 per litre on petrol and diesel between March 2020 and May 2020 and was standing high at Rs 31.8 on diesel and Rs 32.9 per litre on petrol before finally the Centre decided on duty cut.

The Centre has also urged states to reduce VAT on fuel to provide a larger relief to consumers.

Accordingly, states such as Uttar Pradesh, Goa have already cut VAT on fuel to enhance the retail fuel price reduction for consumers.

Other states are also expected to follow suit.