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India oil firms cut petrol prices after protests

The cut reduced the cost of a litre of petrol by 2.46 rupees to 67.78 ($1.19) per litre, the country’s largest refiner Indian Oil Corp. (IOC) said in a statement.

It was the second cut this month following a record 11 percent hike in prices in May that triggered the severe political backlash.

India imports around 80 percent of its oil needs and the import bill has risen dramatically because of high global prices and a plunging rupee.

State-run refiners complain that they are forced to incur massive revenue losses due to the constraints in revising their selling prices in line with the international price.

The Congress-led government deregulated petrol prices in 2010 in a reform aimed at reducing the massive subsidies it pays to state-run fuel refiners which rely on imported energy.

But it still wields significant influence when it comes to petrol price changes and retains complete control over the heavily subsidised costs of diesel, cooking gas and kerosene, which are used most by India’s poor.

Friday’s cut reflects a recent drop in international crude prices, but IOC stressed that it had still sustained losses of 10.5 billion rupees since April 1.

The refiner also estimated losses of 830 billion rupees on the sale of diesel, kerosene and cooking gas for the current financial year.

The main opposition Bharatiya Janata Party (BJP), which had organised a nationwide protest after the sharp May increase, said Friday that the two subsequent cuts did not go far enough.

“The government should show some honesty and take back the entire price hike .... The international price does not support this half-hearted roll back,” BJP spokesman Tarun Vijay told the Press Trust of India.

The high cost of imported fuel is partly blamed for the ballooning of India’s current-account deficit — the gap between exports and goods and services imports — to its widest level in eight years.