NEW DELHI - India late Wednesday allowed its state-run petroleum retail companies to cut the prices of gasoline, diesel and cooking gas. Petrol will now be cheaper by Rs.5 a litre, diesel by Rs. 2 and cooking gas by Rs.25 per cylinder.

The decision was taken by a meeting of the Cabinet Committee on Political Affairs (CCPA), presided over by External Affairs Minister Pranab Mukherjee. The cuts in fuel prices will be effective midnight Wednesday, an official statement said.

Mukherjee announced the decision after the four-hour meeting, held in the absence of Prime Minister Manmohan Singh, who is recovering from a heart surgery.

‘We have taken a number of important decisions. These will be conveyed later. But let me tell you we have decided to cut the prices of petrol by Rs.5 per litre, diesel by Rs.2 and LPG (liquefied petroleum gas) by Rs.25 per cylinder,’ Mukherjee said.

‘We have decided to pass on benefits of the softening international crude oil prices to the consumers,’ Petroleum Minister Murli Deora added.

The government had last cut fuel prices Dec 5 last year, but the cost of LPG was kept unchanged, despite demands from coalition partners.

‘We want to give relief to housewives,’ Railway Minister Lalu Prasad said Wednesday.

In a statement soon after, the petroleum ministry said the current fiscal had witnessed unprecedented volatility in global oil prices where the Indian basket of the commodity had touched $142 per barrel on July 3 and plummeted to $35.83 per barrel Dec 24.

The ministry said state-run oil retailing companies had to contend with a loss of Rs.106,000 crore (Rs.1,060 billion) during April to December by having to sell transport and cooking fuels at below cost price, the ministry said.

An indication that prices of fuels will be cut soon came Tuesday from Congress party president Sonia Gandhi, who is also the chairperson of the ruling United Progressive Alliance (UPA).

‘The prices of petroleum products have decreased recently and I expect that soon they will dip further,’ she had said during a speech in her constituency in Uttar Pradesh Tuesday.

Prior to the Dec 5 move, the government had not allowed any cut in prices since the hike in fuel prices in June, when the international oil prices were at about $130 a barrel, even though global crude prices had fallen consistently.

It said the depreciating rupee was eroding the gains from falling crude rates.