The Indian government is to scrap its subsidy of petrol prices in an effort to cut its budget deficit.
Ministers also voted to raise the price of other fuels, including diesel and kerosene gas in an effort to raise money.
India's fiscal deficit is forecast to hit 5.5% of GDP by 2010-11.
But the BBC reports the move is likely to be politically unpopular and there are concerns that higher fuel prices will lead to higher inflation.
Oil secretary Sthanunathan Sundareshan told reporters that allowing the price of petrol to be decided by the market will add about 3.5 rupees ($US0.08) to the price of a litre of petrol.
Diesel prices will be increased by 2 rupees per litre and kerosene will be raised by 3 rupees.
