G et ready for a major shock! Diesel -- from Friday midnight -- will cost Rs 3 per litre more, while the price of cooking gas cylinder has been increased by a whopping Rs 50 per cylinder.

The price of the poor man's fuel -- kerosene -- too has been hiked by as much as Rs 2 a litre.

The decision to hike fuel prices was taken by the Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee. The increase was announced by Petroleum Minister Jaipal Reddy in New Delhi late Friday evening.

Reddy also said that excise duty on diesel reduced from Rs 4.60 a litre to Rs 2 a litre. Customs duty on diesel has been cut from 7.5 per cent to 2.5 per cent, while the 5 per cent customs duty on crude has been abolished.

He said that the revenue loss to the government due to cut in excise and customs duties would be to the tune of Rs 49,000 crore (Rs 490 billion) for 2011-12.

The increase in fuel prices will see the public sector oil companies' under-recoveries decline by Rs 21,000 crore (Rs 210 billion), Reddy said.

This is the tenth hike in the price of fuel in just over a year. With this hike, inflation is likely to rise sharply once again.

-- With inputs from PTI

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