in June 2010, the last price hike came on November 4. Since then, the government did not allow any increase due to political compulsions despite oil prices shooting up following the huge fall in the value of the rupee against the dollar.
A protester burns a portrait of Prime Minister Manmohan Singh during a protest in Odisha against the steep rise in petrol prices. State oil companies raise the price of petrol for the first time in more than six months in a gesture of fiscal discipline that economists said is unlikely to give a significant lift to the embattled rupee. Reuters photo
The oil companies, which had in the fiscal ending March 31, 2012 lost Rs. 4,860 crore on petrol sales, are now losing Rs. 6.28 a litre. After including the 20% VAT, the increase in petrol price in Delhi came to Rs. 7.54 a litre.
While no revision has been announced immediately in diesel and cooking gas prices, senior government officials said it might be announced shortly after the meeting of the empowered group of ministers — chaired by finance minister Pranab Mukherjee — on Friday or early next week.
Prices of diesel, kerosene and cooking gas were last raised in June and the EGoM, with representatives of key UPA allies such as the TMC and DMK, hasn’t met for almost a year now.
Chairman of the prime minister’s economic advisory council C Rangarajan had suggested in a report to the government that a Rs. 4-a-litre hike in diesel prices was necessary besides charging market prices for cooking gas beyond four cylinders at subsidised prices a year.
Petroleum and natural gas minister Jaipal Reddy, who is now in Turkmenistan to sign a gas pipeline deal, hinted on Tuesday at the hike, citing the free fall in rupee prices against the dollar as the reason.
He said, “If the rupee depreciates by one against the dollar, the OMCs (oil marketing companies) lose Rs. 8,000 crore annually. The rupee on Monday dipped to Rs. 55 to the dollar against R46 last year. This translated into a loss of Rs. 72,000 crore on account of rupee depreciation this year.”
The Capital’s filling stations saw long queues after the announcement of the hike, since the decision was to take effect from midnight Wednesday.
A Delhi Police officer said, “Some petrol pumps stop selling petrol claiming they are out of stock. They start selling after midnight when they can charge the increased amount. This makes motorists angry.”
The hike saw howls of protest from the government’s allies and opponents as it comes at a time when UPA-2 is celebrating its three years in office.
The UPA’s outside supporter Samajwadi Party dubbed it a “gift” to the common man from the government on its completion of three years in office.
Mamata Banerjee, chief of the Trinamool Congress — the second biggest constituent of the UPA — reacted sharply, saying her party would not accept the hike. But she made it clear that she would not topple the government, as it would create economic and political instability.
Petrol in Mumbai will cost Rs. 78.57 a litre against Rs. 70.66. In Kolkata, a Rs. 7.85-per-litre increase will take it to Rs. 77.88 per litre and Chennai will see rates go up by Rs. 7.98 to Rs. 77.53 a litre.
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