The move has come as a relief to commuters who were expecting the prices, at the current rate, to cross Rs 90 per litre for petrol and Rs 85 per litre for diesel.
The price cut sparked fears of the country going back toward the regulated regime where the prices of diesel and petrol were controlled by the government.
Petrol was sold at 83.85 rupees a litre, while diesel was sold at 75.25 a litre on October 3, according to state-run retailer Indian Oil Corp's website.
Bihar government also reduced petrol and diesel prices by Rs 2.52 and Rs 2.55 per litre respectively on Friday.
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Just In: Kerala has ruled out any reduction in Value-Added Tax for matching Centre on reducing petrol/diesel prices.
Finance minister Arun Jaitley on Saturday promised more steps to stabilize the rupee and to reduce current account deficit (CAD) and assured businessmen that India would be agile in its response to global trends impacting the economy.
Shares of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd extended losses and were down as much as 24.38% to 27.96%. The government has reduced the central excise duty levied on petrol and diesel by Rs 1.50.
► Gujarat CM Vijay Rupani said: "Finance Minister Sh @arunjaitley Ji has announced Rs.2.5 cuts in petrol & diesel prices, reciprocating positively to FM's announcement, the Govt Of Gujarat has also made a decision to reduce Rs.2.50 on both petrol & diesel". Yesterday, media reported that the Modi government had allowed local companies affected by the rise in oil prices to borrow internationally up to US$10 billion.