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Petrol price was on Thursday cut by Rs 1.09 per litre, the second reduction in three-and-half-months, while diesel rates were hiked by 56 paise a litre.
The revisions will be effective midnight tonight, Indian Oil Corp, the nation's largest oil firm, announced on Thursday.
Petrol in Delhi will cost Rs 72.51 per litre from tomorrow as against Rs 73.60 a litre currently. Similarly, diesel will be priced at Rs 58.40 per litre from tomorrow as compared to Rs 57.84 currently.
Petrol price was reduced following drop in international oil rates and rupee depreciation against US dollar, making imports cheaper.
For the same reason, price of bulk diesel, which unlike the subsidised fuel available at petrol pumps is priced at market rate, has been cut by 72 paise per litre.
Price of bulk diesel, which as per government policy is meant for large consumers like state road transport corporations, railways and defence, was last revised on July 16 when rates were cut by Rs 1.09 to Rs 59.32 per litre.
Besides, rates of non-subsidised LPG cylinders, which household consumers buy after exhausting their quota of 12 subsidised bottles, has been reduced by Rs 2.50 per 14.2-kg cylinder.
Petrol price was last cut by 70 paise on April 16 in line with declining trend in the international market. This reduction was excluding local levies and after including local sales tax or VAT, the actual reduction in pump rates came to 85 paise in Delhi.
Oil companies as practice announced price revisions without including local levies but today in case of petrol the reduction was announced after including local levies so as to boost up the headline cut. With including local levies, the reduction was about 91 paise a litre.
In case of diesel, IOC announced a increase of 50 paise, excluding local levies. After including local levies, the hike came to 56 paise per litre in Delhi. The reduction in bulk diesel and non-subsidised domestic LPG rates was also after including local levies so as to give an impression of a bigger cut.
State-owned oil firms revise petrol prices on 1st and 16th of every month after considering the average of international oil rates and foreign exchange rates in the previous fortnight.
In case of diesel, they have been following the January 2013 policy of raising rates by up to 50 paise every month till such time that the under-recovery or the gap between the retail selling price and the actual cost, is bridged.
Even after today's increase, oil firms are losing Rs 1.33 per litre on diesel and it will take three more monthly increases to bring retail prices at par with market rates.
The government freed petrol prices from its control in June 2010 and since then state-owned oil firms have been revising rates on the 1st and 16th of every month based on the fortnightly average of international oil prices and the rupee-US dollar exchange rate.
For diesel, the government had in January last year decided to allow oil firms to raise rates by up to 50 paise a litre, excluding local levies, every month until losses on the fuel are wiped out.
Diesel prices have cumulatively risen by Rs 11.24 a litre in 18 instalments since January 2013 when the previous UPA government had decided on the monthly hikes.