The Government must take advantage of falling global crude oil prices and deregulate diesel, said RBI Governor Raghuram Rajan said at a conference today.

Brent crude, a benchmark for Asian and Indian buyers, has fallen 14 per cent since June to $96.38 per barrel.

The NDA government has continued with the previous UPA regime policy of raising diesel rates by up to 50 paise a litre every month to bridge the gap between cost and retail prices.

"Lower crude oil prices are helping consuming countries like us. Typically a lower oil price means a lower CAD, lower oil subsidies and lower inflation. We need to seize this moment to eliminate diesel subsidies completely. We should take this moment to eliminate diesel subsidies as soon as possible," Rajan told a banking conclave in Mumbai.

According to agency reports, under-recovery or the gap between retail selling price and the cost of imports, this month dipped to an all-time low of 8 paise a litre, helped by the monthly increases and softening in international oil rates.

The cut in diesel prices will not only help consumers with diesel-powered cars, but will also help bring down inflation in the economy.

The next revision in diesel prices is due this month-end and going by the present trend, the under-recovery will be wiped out with a minimal hike.

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