State-owned oil firms, which skipped raising rates on September 16 even though their cost had gone up, cut prices in view of the downward trend in international markets.
Petrol price was reduced by 54 paisa a litre without including local sales tax or VAT, with effect from midnight tonight.
After accounting for the incidence of local sales tax, petrol rate in Delhi was reduced by 65 paisa to Rs 67.86 per litre, according to Indian Oil Corp (IOC), the nation's largest fuel retailer.
In Mumbai, petrol price was cut by 68 paisa to Rs 75.73 per litre.
Petrol price was last cut by Rs 1.50 a litre, excluding state levies, on August 31. That reduction in Delhi came to Rs 1.82 per litre.
Alongside, the price of non-subsidised 14.2-kg cooking gas LPG cylinder, which consumer buy after exhausting their quota of 12 subsidised bottles in a year, was cut by Rs 21 to Rs 880 in Delhi.
However, a reduction diesel rates, the first since January 2009, was put off till Modi's return from the US as the Oil Ministry felt it did not have a clear mandate to reduce rates post the January 2013 decision of the Cabinet to raise prices by 40-50 paisa a litre every month.
Petrol price was cut as it is a deregulated product needing no government intervention.Softening international oil rates has meant that diesel under-recovery or the difference between retail price and its imported cost was wiped out and there was an over-recovery of 35 paise a litre from September 16. This over-recovery is now about Re 1 a litre.
Oil Minister Dharmendra Pradhan is believed to have already written to Modi on the emerging scenario. Also, the ministry has written to the Election Commission seeking their concurrence for the price decrease in view of state assembly elections in Maharashtra and Haryana. A decision will be taken after Modi's return, they said.