India Inc on Thursday said the government's decision to hike petrol and diesel prices will help oil companies cut losses on sale of LPG, petrol, diesel and kerosene.

In a statement issued in New Delhi, industry body Ficci said, "Given the high level of international crude prices, some adjustment of the domestic retail prices had become inevitable as under-realisation on sale of petroleum, diesel and other products had reached a staggering Rs 71,808 crore (Rs 718.08 billion)".

It said hike in petroleum and diesel prices would add to inflationary pressures. "The government could have, however, implemented the Petroleum Ministry's demand for reduction in excise duty on petrol and diesel by Re one per litre," Ficci added.

This would to some extent address the rising distortion in petroleum sector since it was the government that issued oil bonds to meet part of the difference between sale price and international price at which oil companies buy crude.

Terming the move as a "sensible decision", Assocham President Venugopal Dhoot said it would help reduce under-recoveries of oil marketing companies to some extent.

"This should have been long ago as losses of oil marketing companies have been mounting. Crude oil prices are increasing internationally and the common man ought to bear the burden of rising crude oil prices," Dhoot said.

The government hiked petrol and diesel prices by Rs two and Re one per litre respectively effective from midnight on Thursday to curb losses of public sector oil companies.