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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Petrol cut by Rs 5, diesel Rs 2

The Centre late on Wednesday night slashed the prices of petroleum products, including petrol, diesel and cooking gas, by Rs 5, Rs 2 and Rs 25 respectively.

Oil dealers were working out the new rates for for Hyderabad.

It is not clear how the AP government will deal with the cut in LPG price. It had absorbed the hike of Rs 50 the last time.

Announcing the decision of the Cabinet Committee on Political Affairs headed by the external affairs minister, Mr Pranab Mukherjee, the petroleum minister, Mr Murli Deora, said, “The government has decided to reduce petrol, diesel and LPG prices to pass on the benefit of softening international oil prices to consumers.”

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State digs heels on tax cut

The Finance Minister, Mr K. Rosaiah, on Friday ruled out any cut in Value Added Tax on petrol and diesel to reduce the burden of the steep fuel price hike on the common man.

Opposition parties and economists, meanwhile, pointed out that the state was collecting highest VAT of 33 per cent on petrol and 22.25 per cent on diesel and reducing it was the best way to lighten the effect of the price hike.

However, Mr Rosaiah said a firm no to this suggestion while addressing a press conference with the Commercial Taxes Minister, Mr K.Ramakrishna.

Mr Rosaiah even tried to obfuscate the advice of the Congress president, Mrs Sonia Gandhi, to reduce local taxes by saying that she had not specified which tax to be reduced to what extent.

“We cannot make adjustments at this juncture because the budget was prepared keeping in view the existing rate structure,” he said.

Experts have pointed out that the government had fixed a higher commercial tax target of Rs 6,500 crore without having any clue about the Rs 400 crore which could come out of the fuel price hike and could very well for go it. However, Mr Rosaiah dismissed this suggestion in his usual sarcastic manner.

Meanwhile, the Opposition parties, including the Telugu Desam, TRS, CPI (M), CPI and the BJP, were angry at the government stance and threat ened to intensify their agitation. “The state gets Rs 20,000 crore from sales tax on petroleum products and if it reduces this, there need not be a hike at all,” said TD official spokesperson, Mr M.V. Mysoora Reddy.

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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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