Fuel price hikes by Rs 2 for petrol and Re 1 for diesel

Despite constant opposition from the Left and BJP, the government on Thursday enhanced prices of petrol and diesel by Rs 2 and Re 1 per litre respectively. Kerosene and LPG cylinder prices have kept unchanged.

The Left parties and the opposition BJP condemned the uncalled hike in prices and threatened to launch a nation-wide campaign.

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CPM Polit Bureau and CPI central secretarial issued separate statements soon after the cabinet decision to raise the price, seeking a roll back of the hike in fuel prices. CPM leader Sitaram Yechury said rise in fuel prices would have been avoidable if the government had restructured the ad valorem tax on import of petroleum products.

He said that hike came at a time when the people were already suffering from the increasing prices of essential commodities and added, “This hike will only fuel it further and have a cascading effect.”

The CPM said the hike in petroleum prices could have been averted if the government had returned ad valorem tax to the oil companies that it had collected over the budget estimates.

“It is just out of our consideration that why the government refused to accept the Left’s proposal and increased the prices,” said the CPI.

The main opposition party, BJP also termed the move as anti-people and it would trigger inflationary trends and put pressure on the common people already crushed under the increased prices of commodities.

“The hike would further push up the prices of essential commodities, affecting all sections of the society mainly middle class and the farmers,” said the BJP president Rajnath Singh pledging to launch a countrywide agitation.

“The UPA government seeks to profiteer with every increase in petroleum prices at the cost of inflationary impact. The BJP has already warned the government to adopt a policy of revenue neutralisation before taking any decision on price hikes,” national party spokesperson Javadekar said in a statement, “the tax burden on petroleum products at more than 50 per cent was the highest in the world.”

The government decision to increase the fuel price is unfortunate one that came at a time when the international crude oil prices have started to roll down. The party spokesperson said this was the eighth time when the Congress-led UPA government had increased the fuel prices and put extra pressure on the wretched common man.

“It is ironical that the Indian customer is being asked to pay more, although he is already paying the highest petrol prices in the world, if compared on a Purchasing Power Parity Index (PPP),” said Javedkar.

Even as the BJP and Left spoke in sync against the move to raise fuel prices, the Congress defended the government’s decision saying this was the ‘minimum possible increase’ and that a large part of the potential hike has been absorbed by the government.

“Economists are familiar with the phrase, ‘get the prices right’. The challenge before us today is to also get the politics right. If we can get politics and prices right, the economy would be on surer ground for sustained growth,” the prime minister said.

He further said the prices of petrol and diesel are being raised after nearly a year. The prices of petrol and diesel were last revised on February 15 last year with a reduction of Rs 2 and Re 1 per litre respectively. With this hike, the price of petrol and diesel are now at the November 2006 level, he said.

Petrol and diesel prices will be increased from midnight tonight. We have tried our best to have a moderate increase in the prices,” Petroleum Minister Murli Deora said on Thursday.

The issue of increasing the prices of sensitive petroleum products was decided by the Cabinet Committee on Political Affairs. The committee decided to raise the quantum of oil bonds to be issued to state-run oil retailers to partly compensate them for selling auto and cooking fuel below cost, Deora said.

Finance minister P Chidambaram was "fully aware of the situation and he would respond," said Deora in reply to a question why duties were not cut as suggested by the Left to avoid the hike.

The increase in prices will give an additional Rs 180 crore a month on petrol to the oil marketing companies and Rs 360 crore on diesel sales. In the remaining months of the current financial year, the cumulative gain for the companies is estimated to be Rs 840 crore.