India moves to cut prices on fuel

India is cutting fuel prices from midnight to take advantage of falling crude prices and to try to boost the economy amid the global crunch.

State-run fuel retailers will be allowed to drop petrol prices by five rupees (10 US cents) a litre and diesel by two rupees a litre.

It is the first cut in Indian fuel prices for 22 months.

Oil prices globally are more than $100 below their $147 a barrel highs seen in July this year.

Elections

The fall has given the Indian government more room to move on its expected economic stimulus plans.

The fall was announced by Oil Minister Murli Deora. It should bring prices in Delhi to about 45.6 rupees a litre. Prices around the country may vary.

In India the costs of most widely used fuels are partly subsidised by the government. LPG and kerosene remain unchanged.

Analysts say the move could be combined with a cut in short-term interest rates over the weekend in an expected economic stimulus announcement.

They say the stimulus could be a key measure for the government given general elections are due in the first half of next year.

The government had increased fuel prices in June ahead of July's record $147 a barrel.