This was coupled with a decision to charge bulk consumers like defence, railways and state transport undertakings market price which is almost Rs 10 a litre more than retail selling rate, to save an estimated Rs 12,907 crore in annual subsidy.

As a sweetener to the bitter pill, the Cabinet Committee on Political Affairs chaired by Prime Minister Manmohan Singh bowed to public pressure to raise the cap on subsidised LPG to nine cylinders per household from six.

State-owned oil companies in a parallel cut petrol price by 25 paise a litre in view of softening in global oil rates.

The decisions on diesel rate increase for retail and bulk consumers will cut subsidies by about Rs 15,000 crore on an annualised basis and by Rs 3,400 crore in remainder of FY'13.

While the base hike in diesel price was 45 paisa, it will lead to an increase of 51 paisa in Delhi after including local VAT. New rate of Rs 47.66 a litre will be effective from midnight tonight.

Similarly, while the base rate cut on petrol was 25 paisa, it will translate into a reduction of 29.75 paisa in price in Delhi to Rs 67.27 a litre with effect from midnight tonight.

While subsidised LPG rates haven't been increased, non-subsidised cooking gas which consumers will buy beyond their new entitlement of 9 cylinders, will cost Rs 46.50 more at Rs 942 per 14.2-kg cylinder.

Bulk users, which consumer around 17.77 per cent of the total diesel sales in the country, will pay Rs 56.88 a litre in Delhi with effect from midnight tonight. These rates would be revised on 1st and 16th of every month based on previous fortnight average oil cost. The same is the methodology followed for pricing of jet fuel (ATF).

Prices vary from city to city due to differential local sales tax or VAT rates.

In bold reforms, the government today moved towards deregulating diesel when it raised prices by 50 paisa per litre (rpt) 50 paise and planned similar monthly hikes in future to cut record subsidies.

This was coupled with a decision to charge bulk consumers like defence, railways and state transport undertakings market price which is almost Rs 10 a litre more than retail selling rate, to save an estimated Rs 12,907 crore in annual subsidy.

As a sweetener to the bitter pill, the Cabinet Committee on Political Affairs chaired by Prime Minister Manmohan Singh bowed to public pressure to raise the cap on subsidised LPG to nine cylinders per household from six.

State-owned oil companies in a parallel cut petrol price by 25 paise a litre in view of softening in global oil rates.

The decisions on diesel rate increase for retail and bulk consumers will cut subsidies by about Rs 15,000 crore on an annualised basis and by Rs 3,400 crore in remainder of FY'13.

While the base hike in diesel price was 45 paisa, it will lead to an increase of 50 paisa (rpt) 50 paise in Delhi after including local VAT. New rate of Rs 47.65 a litre (rpt) Rs 47.65 will be effective from midnight tonight.

Similarly, while the base rate cut on petrol was 25 paisa, it will translate into a reduction of 30 paisa (rpt) 30 paise in price in Delhi to Rs 67.26 (rpt) Rs 67.26 a litre with effect from midnight tonight.

While subsidised LPG rates haven't been increased, non-subsidised cooking gas which consumers will buy beyond their new entitlement of 9 cylinders, will cost Rs 46.50 more at Rs 942 per 14.2-kg cylinder.

Bulk users, which consumer around 17.77 per cent of the total diesel sales in the country, will pay Rs 56.88 a litre in Delhi with effect from midnight tonight. These rates would be revised on 1st and 16th of every month based on previous fortnight average oil cost. The same is the methodology followed for pricing of jet fuel (ATF).

Prices vary from city to city due to differential local sales tax or VAT rates.

Subsidised LPG costs Rs 410.50 per 14.2-kg cylinder and any household requirement beyond the new cap of 9 cylinders will have to be bought at Rs 942 per bottle.

As per the September 13 decision of the CCPA, which had originally capped subsidised LPG supply at 6 cylinders per household in a year, the non-subsidised LPG was to be market priced.

Oil Secretary G C Chaturvedi said after today's decision, consumers will get 5 subsidised cylinders instead of previously mandated 3 in the period to March 31, 2013. From April 1, 2013 they will get 9 cylinders in a year.

Moily said the decisions at CCPA were based on recommendations of the Vijay Kelkar Committee, which was appointed by the Finance Ministry to suggest a roadmap for fiscal consolidation.

The panel had recommended an immediate hike in price of diesel by Rs 4 per litre, of kerosene by Rs 2 a litre and of LPG by Rs 50 per cylinder. Thereafter, it suggested raising rates on a monthly basis till revenue losses are wiped off.

Officials and ministers refused to call the CCPA's decision as deregulation but experts felt that this could be the beginning of such a course.

Moily said the decision to decontrol diesel was taken in June 2010 but was not implemented. "We have now given the liberty to oil marketing companies to go for small increases.

We have taken the first and decisive step. When it is to be totally deregulated, has been left to the oil marketing companies," he said when asked whether today's decision would amount to complete deregulation or partial deregulation.

Finance Minister P Chidambaram refused to enter into a discussion on the issue.

The government had in June 2010 deregulated petrol pricing and had in-principal decided to decontrol diesel.

Though decontrolled, petrol rates have rarely moved in tandem with cost and state-owned oil companies have often acted on political counsel in deciding on rates.

The decision on diesel was never implemented.