The government has decided to slash prices of petrol, diesel by Rs 5 and Rs 2 a litre with effect from midnight Friday, the first in over two years.
The price cut will come as a relief to fuel consumers, rein in inflationary pressures and boost demand in the economy.
Fuel consumers who have seen increases in their fuel bills over the past two years, and an increase in their home budgets because of rising prices of fruits, vegetables, food articles and travel.
The price cut will also help rein in inflationary pressure as most of the transportation trucks and railways use diesel as a fuel.
A cut in diesel prices is expected to soften prices of fruits, vegetables, food grain and industrial products.
Inflation in food products has been steadily increasing and was at a nineteen month high of 10.43% according to the latest government data.