Govt may cut fuel prices by about 10 pct by Jan-end

The government may cut fuel prices by up to 10 per cent by the end of January, Oil Minister Murli Deora said on Wednesday, a month after the government last lowered state-set rates for petrol and diesel. "The price cut is under active consideration. In two to three weeks, a decision will be taken," he said. India cut gasoline prices by 10 per cent and diesel by 6 per cent in the first week of December, when it also announced other measures to lift wobbly markets in a slowing economy. "The cut may be as much as last time, or may be even more," Deora said. The likely cut in fuel prices, ahead of general elections due by May, will further reduce inflation, which has already fallen to a near 10-month low of 6.6 per cent. Analysts say low inflation may fuel further cuts in central bank interest rates to help India's $1 trillion economy, which is expected to grow about 7 per cent in 2008/09, slowing from a blistering 9 per cent in each of the previous three years. The government sets the price of petrol, diesel, cooking gas and kerosene to keep inflation under control and compensates state-run refiners by issuing bonds and giving them cheap crude from Oil and Natural Gas Corp. While US crude has fallen about $100 from its July peak above $147, fuel prices in India, which were already lower than market rates, have been reduced only moderately.