Petrol price was slashed by Rs 2.22 a litre, the first reduction in 33 months.

Petrol in Delhi will cost Rs 66.42 per litre with effect from midnight tonight as against Rs 68.64 a litre now.

The reduction comes days after state-owned oil companies raised petrol prices by a steep Rs 1.80 per litre.

State-owned oil companies passed on Rs 1.85 a litre that they gained from a fall in global oil prices and a marginal appreciation in rupee value. Adding 20 per cent local sales tax, the decrease in Delhi comes to Rs 2.22 per litre.

The reduction in Mumbai was Rs 2.34 per liter while in Kolkata it was Rs 2.31 a litre. The price cut in Chennai was Rs 2.35 per litre.

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Fuel subsidies are perverse: Ramesh

New Delhi, Nov 15 (PTI) "Fuel subsidies are perverse," minister of rural development Jairam Ramesh said today amid the uproar over petrol price hike, as he pointed out that government spends roughly Rs 1,10,000 crore on such sops.

Warning that the problem will intensify if petrol prices are hiked without touching diesel, he said Rs 67,000 crore is the diesel subsidy which is more than the amount government spends on its flagship programmes like MNREGA and PMGSY.

Favouring a change in government policy on the issue of fuel subsidy, Ramesh, who has been a vocal critic of fuel subsidies, however, admitted that no government could implement such a policy overnight in a country where millions of farmers depend on diesel engines to pump water for their crops.

"I believe that fuel subsidies are perverse subsidies. We spend today roughly Rs 1,10,000 crores on subsidy on diesel, kerosene and LPG which is more than what we spend on rural development programmes," Ramesh told reporters on the sidelines of a function here.

"And the more you increase petrol prices without touching diesel prices, you are going to have a problem," he said.

He also said car owners and captive power generators are the two major beneficiaries of Government's subsidy on diesel.

"Diesel subsidy of course today... 15 per cent of diesel consumption is in cars and 8 per cent of diesel consumption is in captive power generation. I mean 23 per cent of diesel in going into areas where diesel should not be used and that is a direct consequence of pricing," Ramesh said.

"The use of diesel in power is a reflection of collapse of our power system and the 15 per cent share of diesel consumption in cars is a direct result of the pricing policy we have adopted," the Minister said.

Ramesh also revealed that there is a proposal to have a more "rational approach" to LPG subsidy.

"There will always be some element of subsidy in kerosene. There is a proposal now to have a more rational approach to LPG where average family uses about eight cylinders a year... four cylinders come at market price, four cylinders you will get at subsidised price. That is a very rationale solution," he said.