Steep hike in oil prices

In a surprise move, the Union government bypassed the Cabinet to raise the price of petrol by Rs 4 per litre and that of diesel by Rs 2 a litre with effect from Wednesday midnight. In the state, the hike was Rs 4.44 for petrol and Rs 2.17 for diesel.

The petroleum minister, Mr Murli Deora, told reporters that the hike was necessitated because of rising international crude oil prices which have doubled to $70 a barrel. Mr Deora only consulted party leadership and the Prime Minister, Dr Manmohan Singh, to decide on the hike. The decision was rushed through since the Parliament’s Budget session is to begin on Thursday and the government wanted to act before that. The weekly Cabinet meeting is scheduled for Thursday.

Mr Deora said the government will not raise the domestic LPG and kerosene prices though the public sector oil companies are losing Rs 92.96 per cylinder and Rs 15.26 per litre of kerosene respectively.

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Steep increase in fuel prices

The government on Wednesday hiked the prices of petrol by Rs 5 per litre, diesel by Rs 3 and LPG by Rs 50 per cylinder, one of the steepest increases in recent times, which evoked strong protests from both allies and the Opposition parties.

With general elections less than a year away, the UPA came under fire from friend and foe alike: the BJP called for the resignation of Prime Minister Manmohan Singh while the Left parties decided to hit the streets from Thursday for a week of nationwide protests. Bandhs have been called in the Left-ruled states of West Bengal, Kerala and Tripura on Thursday. In West Bengal, Mamata Banerjee’s Trinamul Congress has called for a further bandh on Friday.

“We are helpless. There was no other option as the losses of the oil companies were huge,” the petroleum minister, Mr Murli Deora, said at a press conference while announcing the hikes. The price of kerosene, the so-called poor man’s fuel, was untouched. The Cabinet Committee on Political Affairs, which met in the morning, gave its approval.

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