UPA's govt. gift to aam aadmi; hike petrol price by over Rs.7

Just after celebrating the third anniversary of incumbency in second term, the United Progressive Alliance (UPA) government on Wednesday 'granted' a prickling gift to common men in the form of hiking highest ever petrol prices by Rs.6.28 a litre excluding taxes.

After including taxes, the hike would reach between Rs.7.54 and Rs.7.98 in the four metros and would be higher or lower in other cities depending on the extent of taxes. It came into effect from Wednesday midnight. This is the highest-ever increment at one stance which has attracted severe criticism from the opposition, from common men and even from their allies too.

However, government has no regret in this regard, as Prime Minister on Tuesday had indicated to take some stiff action to mobilize revenue.

Giving the reason behind this price hike, government has said in a release that as Oil Marketing Companies (OMCs) were selling the petroleum products at subsidized prices and incurring huge loss per day, so this price hike of petrol would partially fulfill their losses.

Petroleum and Natural Gas Minister S. Jaipal Reddy said that the depreciating prices of rupee has also mounted pressure over OMCs to pay more of purchasing crude oil that led them to hike prices.

With this new price hike, the cost of Petrol in Delhi became Rs.73.18 a litre, in Mumbai Rs.78.57, in Kolkata Rs.77.88 and in Chennai Rs.77.53 a litre.

This price hike has received mixed reaction from the corporate sector and aam aadmi as India Inc has said that the increase had become inevitable with the continued slide of the rupee's exchange rate.

However, they have suggested that states can blunt the pinch of this hike by reducing various types of taxes levied on petrol.

States levy sales tax of 15-33 percent. Among the other levies are VAT and additional sales tax.

"The inflationary impact of such an increase is ... transitory. It can be mitigated by reduction in taxes by the central and state governments," the Federation of Indian Chambers of Commerce and Industry said.

While on the other hand, aam admi has expressed their anger who were already suffering from inflation heat.

Congress has defended its decision by saying that the price of crude oil has shoot up in the world while Indian currency has slipped severely. And India is the part of globe, so any hike or slip in crude oil will affect too.

A defensive Congress took refuge in the high global prices of oil. "Global prices are up and the oil companies take their own decisions after the deregulation of petrol prices. India is part of the world and so it is affected too," said Congress spokesperson Rashid Alvi.

The middle class reacted with predictable anger.

The opposition tore through the official justification of the price rise while allies DMK and Trinamool Congress too flayed the Congress-led government.

But even as she attacked the Congress for not consulting the allies over the issue and expressed her opposition to the price rise, Trinamool leader and West Bengal Chief Minister Mamata Banerjee refused to quit the UPA.

Both DMK chief M. Karunanidhi and Punjab Chief Minister Parkash Singh Badal demanded an immediate rollback, saying the hike would badly hurt the common man.

The CPI-M and other left parties were the most critical.

D. Raja of the Communist Party of India said: "It is just a prelude. It will burden the common people and we will protest on the streets and the government will have to rollback the hike."

Corporate Affairs Minister M. Veerappa Moily justified the decision, pointing out at the fiscal deficit and an economic situation "going out of hand". He said the price rise was "most minimal".

The Bharatiya Janata Party blamed fiscal mismanagement for the decision. Tamil Nadu Chief Minister J. Jayalalitha mockingly called it a "gift" from the UPA-II government on its third anniversary.

India deregulated petrol prices in June 2010 but continues to subsidise kerosene, diesel and cooking gas to protect the poor from inflationary pressures.

Petrol prices were last revised Nov 4, 2011.

The oil companies have been losing Rs.8,000 crore per annum as they were being forced to sell petrol at subsidised rates.

--Wtih IANS Inputs--