New Delhi: The Government will cut excise and customs duty on petrol, diesel, LPG and kerosene to contain the effect of spike in international crude oil prices, which touched an all time high of $ 47 a barrel.

Customs duty on all the four sensitive products would be cut while excise duty would be cut on petrol, diesel and kerosene.

A decision to cut duties, one of the various measures to check spiralling inflation that the Manmohan Singh Government has been considering, is likely to be announced in Parliament this week.

"Singh today (Aug 16, 2004) convened a meeting of Finance Minister P Chidambaram and Petroleum Minister Mani Shankar Aiyar to discuss ways of mitigating fuel pricing pushing inflation, which has already touched 7.61 per cent. The duty cuts were broadly decided," highly placed sources said.

Sources said excise and customs duties may be cut by two per cent each on all the four products.

Singh met Chidambaram and Aiyar first in Parliament for half an hour in the morning, followed by an hour-long meeting in the evening at Prime Minister's residence.

"As a fall out of duty cuts, petrol and diesel prices will not be raised again," sources said and pointed out that price revision was due yesterday but was put off pending fiscal measures the Government was planning. Without the duty cuts, petrol prices would have gone up by about Re one per litre and diesel by about Rs 1.10 per litre in Delhi.

The one-hour long meeting in the evening discussed revenue implications of the duty cuts. Currently, petrol and diesel attract 20 per cent customs duty. While India does not import the two transport fuels, the customs duty is taken into account while calculating the retail selling price.