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Another cut in diesel price?

business Updated: Mar 04, 2009 20:38 IST
Anupama Airy
Anupama Airy
Hindustan Times
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Despite the announcement of general elections and the model code of conduct being in place, potential voters can expect last minute goodies. The Congress-led UPA government may cut the price of diesel by Rs 2-3 a litre.

“There is no bar on the government to cut fuel prices even after the polls are announced,” a senior UPA minister told Hindustan Times on the condition of anonymity. “The only requirement is that the Election Commission (EC) has to be informed before making any public interest announcement.”

He further said that the proposed cut in diesel prices is in line with the fall in international oil prices and is being “planned more as a feel-good factor for the public in the present gloomy times.”

Fuel prices were last cut in December 2008, when two phases of elections were yet to be completed in Jammu and Kashmir.
Petrol and diesel prices have already been cut by Rs 10 per litre and Rs 4 per litre respectively since December 2008. The price of cooking gas (LPG) has also been reduced recently by Rs 25 per cylinder.

When contacted, petroleum minister Murli Deora refused to comment on the issue. Last year, he had earned a notice from EC when he remarked on effecting a fuel price cut during assembly elections.

“This government always fails to act on time,” said Ram Naik, former petroleum minister in the NDA government. “They could have considered this earlier when Parliament was in session.”

Any reduction in diesel price at this stage would further help in bringing down inflation levels, currently ruling at 3.36 per cent. Besides, the proposed cut in diesel prices will also help in making transportation of fruit and vegetables cheaper, thereby benefiting voting households.

Global crude oil prices are currently ruling at close to $40 a barrel and state-owned oil firms --- Indian Oil, Bharat Petroleum and Hindustan Petroleum --- are making a profit of around Rs 3.50 per litre on diesel sales.