5 Dec : The government may cut retail fuel prices on Saturday, a move that would help rein in inflation and allow RBI to go for deeper policy rate cuts to push economic growth.
Official sources said besides the announcing the cut in petrol, diesel and LPG, a stimulus package to be announced by the government tomorrow may include re-imposition of customs duty on crude oil.
The government had abolished the five per cent customs duty on crude, when its price touched a record USD 147 a barrel in July this year.With crude falling below USD 50 a barrel now, the Finance Ministry is looking at reimposing the levy.
International crude prices are ruling at four-year lows of near USD 45 a barrel. High crude prices earlier this year had prompted the government to increase petrol and diesel prices by Rs 5 and Rs 3 per litre respectively and that of LPG by Rs 50 a cylinder.
This had in turn fuelled inflation to double digits. Inflation has since cooled to 8.40 per cent for the week ended on 22nd November.A cut in fuel prices may bring it down to a tolerable level and give room to RBI to increase money supply to keep the economy ticking despite the global slowdown.
The Petroleum Ministry has prepared a note for consideration of the Cabinet Committee on Economic Affairs and is pressing for an early meeting, sources said.