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'Another fuel price hike likely'

business Updated: Jun 13, 2008 00:52 IST
PTI
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India may go for another round of hike in energy prices as global crude prices continue the upward swing, says credit rating agency Moody's.

"As global prices continue to soar, the government will likely announce further increases in energy prices and cuts in subsidies," said a report by Moody's Economy.Com, an associate of Moody's.

After much dilly-dallying, the government had earlier this month announced hike in price of petrol by Rs five a litre, Rs three for diesel and Rs 50 for a gas cylinder to help oil marketing companies partly meet their under recoveries because of surging global crude prices.

The government still gives Rs 300 subsidy for a gas cylinder.

The government had to face an all-round criticism for its move to raise petrol prices and even Prime Minister Manmohan Singh addressed the nation to explain the rationale for the increase.

Following the appeal of the Prime Minister, many states also cut sales tax on petroleum products to blunt the impact of fuel price hike.

Moody's further said authorities would continue to hand out assistance to the poor households while trying to tame inflation, given that price rise is the biggest obstacle of the incumbent government in restoring voters' trust in the lead up to the general election.

Global crude oil prices were ruling above 138 dollars a barrel on Thursday.

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