The Union Government's think tank, NITI AAyog, on Tuesday said the time was right to cut the excuse duty on fuel.
It added that the central and the state government must cut taxes related to fuel to make it affordable for the citizen.
Petrol price in Delhi was raised to Rs 74.80 per litre from Rs 74.63 while diesel rates were increased to Rs 66.14 a litre from Rs 65.93, according to a price notification issued by state-owned oil marketing companies, on Monday.
India's fuel demand rose 4.5 percent in April compared with a year earlier.
Oil PSUs, who had kept rates unchanged for nearly three weeks before Karnataka went to polls despite input cost spiking, reverted to daily revision in prices no sooner had the state voted to elect a new government on Saturday.
State-owned oil marketing companies are estimated to have lost about Rs 500 crore as they absorbed higher cost resulting from the spike in international oil rates and fall in rupee against the US dollar.
The benchmark international diesel rates during this period have climbed from $84.68 per barrel to $88.63. Also, the rupee has weakened to Rs 67 per US dollar from Rs 66.62, making imports costlier.
State-owned oil companies in June last year dumped the 15-year old practice of revising rates on 1st and 16th of every month and instead adopted a dynamic daily price revision to instantly reflect changes in cost.