4 June, Delhi:The government has announced a Rs 5 a litre increase in petrol, Rs 3 on diesel and Rs 50 per LPG cylinder together with customs and excise duty cuts to combat spurt in global oil prices.
The hike announced by the UPA government, with less than a year to go for general elections, was met with opposition from its Left allies who announced a countrywide stir.
Prime Minister Manmohan Singh will address the nation at 2030 hrs on Wednesday to explain the rationale behind the hike.
"We were left with no option," Petroleum Minister Murli Deora told a packed news conference after a meeting of the Cabinet Committee on Political Affairs that arrived at the decision.
State-run Indian Oil, Bharat Petroleum and Hindustan Petroleum would have suffered a revenue loss of Rs 245,305 crore this fiscal without these measures, he said.
"Due to the relentless increase in international oil prices, it has now become necessary for the consumer… to shoulder a small part of the increased burden, through a marginal hike in prices."
Petrol and diesel prices were last raised in February and the new prices will come into effect from midnight tonight.Crude prices, however, were trading at USD 124.01 a barrel in New York on Wednesday, down USD 11 from its 22nd May peak of over USD 135 a barrel.
The government also announced an across the board 5 per cent cut in customs duties, bringing rates on crude to zero, on petrol and diesel to 2.5 per cent and on other products like ATF and naphtha for non-fertilizer use to 5 per cent.
Besides, excise duty on petrol has been cut by Re one a litre to Rs 13.45 and on diesel to Rs 3.60.Petroleum Secretary M S Srinivasan said the hike in fuel prices would give fuel retailers an additional revenue of Rs 21,153 crore, while the government will forego Rs 22,660 crore of revenues by way of duty cuts.
Deora said he has spoken to the Left leaders including Prakash Karat of CPM and Gurudas Dasgupta of CPI informing them of the compulsions behind the hike. "I can’t say that they supported (the decision)… but they were understanding."
The government denied reports of fuel rationing, saying all of the genuine demand is and will be met."There is no proposal to restrict supply of domestic LPG per family. It is utterly wrong," Srinivasan said. "You can burn as much gas as you need."
The government has decided to increase the subsidy contribution by upstream firms like ONGC and OIL to Rs 45,000 crore this fiscal from Rs 25,708 crore last year. ONGC and OIL give discounts on crude they sell to refiners.
The Left parties pointed out that the hike will "further aggravate" the inflationary situation and asked the government to cut excise duties more and impose windfall taxes on private oil companies and refineries.
The BJP also decided to hold demonstrations at district headquarters across the country tomorrow to protest the hike and demand its immediate rollback.
Congress spokesman Manish Tewari was that "minimal possible burden" has been put on the common man by the government which came to power in the name of the ‘aam aadmi’.
But the Congress logic did not cut any ice even with its allies as RJD General Secretary Vijay Krishna, whose party is the second largest consitutuent of UPA, demanded an immediate rollback, warning that the move was "steps towards death warrant of UPA".
PMK, another constitutent of UPA, also demanded that the government reconsider the hike in price of LPG, saying the increase of Rs 50 per cylinder would adversely hit the middle class.
AIADMK supremo Jayalalithaa said increase in fuel prices was an "insult to the injury" of the commmon man already reeling under rising prices of other essential commodities.
UNPA also flayed the price hike and wanted the government to tax private oil companies which are making huge profits.Samajwadi Party General Secretary Amar Singh said the government instead of protecting the corporate interest should be sympathetic to the common man. Courtsey DD NEWS