will wait a few days before reviewing a steep petrol price increase, resisting protests and pressure from coalition allies to rollback the unpopular move welcomed by investors.
Petroleum minister S Jaipal Reddy addresses a press conference in New Delhi. PTI/Subhav Shukla
Reddy said the government would review prices "within days, not months", after observing the impact of the 11% price rise that led protesters to burn effigies of Prime Minister Manmohan Singh in rallies across the country.
"This is politics, and not physics," Reddy told a news conference in which he suggested the government would stick to its guns unless in became politically untenable.
As the issue threatened to snowball into a major controversy with UPA constituents DMK and Trinamool Congress taking to streets and Samajwadi Party also slamming the Centre, Congress president Sonia Gandhi was huddled for a two-hour-long discussion with the top leaders including Prime Minister Manmohan Singh.
Gandhi reached the Prime Minister's residence 15 minutes before other members of the Core Group including finance minister Pranab Mukherjee, defence minister AK Antony, home minister P Chidmabaram and Ahmed Patel arrived there.
Though there was no official word about what transpired in the meeting, there are indications that the party would prefer some sort of revision in the hiked petrol prices.
At the AICC briefing, party spokesperson Manish Tewari indicated that a revision in the prices could be made in the next few days.
"We do hope that our sentiment will be respected. We had on Thursday itself said that we are fully sensitive if any step of the government puts a burden on common man even if it is required.
"Some or the other decision should be taken with the initiative of the Central government, state governments and oil companies so that the burden put on people is eased," Tewari told reporters.
State oil companies announced on Wednesday they would raise the price of petrol by about Rs. 6.28 a litre, excluding taxes, the first increase in six months as they sought to recover growing losses from higher global oil prices and a plunging rupee.
Economists cheered the price increase, saying it showed the embattled coalition, paralysed for months by infighting and indecision, was taking action to rein in ballooning trade and fiscal deficits. It also raised hopes the government would tackle diesel, kerosene and LPG prices.
In a sign of his support for the economic logic of the price increase, Jaipal Reddy on Friday said he had been pushing for a ministerial meeting on raising diesel and other fuel prices. He did not say when the meeting, due to have taken place on Friday, might now happen.
"Politics is the art of making the desirable feasible," he said.
Petrol is not subsidised by the government, but state refiners, which dominate the market, had kept prices on hold despite an increase in crude prices.
Diesel, kerosene and liquid petroleum gas, fuels used by the poor and in public transport, are heavily subsidised and make up a hefty portion of the ballooning fiscal deficit.
A party leader speaking on condition of anonymity said that some sort of a revision of the price rise on the downward side is expected but only after few days, most likely by month end.
The leader said that he was not ruling out the possibility of a partial roll back but only after few days.
The party, apparently, is in a mood to test the waters before taking any decision on the issue, as there is a view that tough economic measures will be required to bring back the economy on rails.
Tewari said that Congress being a political party has placed the sentiments of the people before the government as well as the country and is "definitely hopeful" that the sentiment will be respected.
He said that while it is a reality that the Administered Price Mechanism stands dismantled and raising petrol prices lies within the jurisdiction of oil companies, "but there is also another angle to it that these products are used by millions of people and there is an inherent sensitivity."
Amid growing street protests and unease within his own party, Reddy came out to defend the third price increase in a year and the first in almost seven months, saying the oil companies had exhausted all options.
Breaking his silence over the hike announced by oil companies on Friday, Reddy said: "All political parties including my own party (Congress) are populist but we cannot run the country on populist sentiments".
He said the government was not able to take a definitive view because there is lot of volatility in value of rupee vis a vis dollar and volatility in prices of crude oil.
"We have decided to watch (the situation) for just a few days and when I say few days it is days not week. We want to know (if this) is a stable trend (and) we will come back to you (about a reduction in rates)," he said.
(With inputs from PTI, Reuters)