An early morning meeting of the Cabinet Committee on Political Affairs (CCPA) on Wednesday is expected to take a call on raising petroleum prices to ease pressure on cash-strapped oil companies.
A decision that would not only have to balance concerns about the hike fuelling the already high inflation rate but also the political price that the hike would entail.
The move to put the oil price hike before the committee comes a day after Prime Minister Manmohan Singh made it clear that the government could not afford to insulate the public from galloping international crude oil prices forever.
On Tuesday, external affairs minister Pranab Mukherjee said the cabinet could take a view on it at its meeting on Wednesday. "I have not seen the agenda for tomorrow's Cabinet meeting but the government is seriously discussing the rise in prices of LPG, kerosene and other petroleum products," Mukherjee told a meeting of business leaders in Delhi.
Officials later said the CCPA would meet at 8 a.m. with a single point agenda: balance the interests of the oil companies and public without letting fuel prices push up the inflation rate.
Oil marketing companies have demanded a steep hike, pointing that their under-recoveries due to subsidies would exceed Rs 2,25,000 crore.
The petroleum ministry had initially sought a hike of Rs 10 a litre for petrol, Rs 5 for diesel and Rs 50 per cylinder for LPG prices. There are, however, indications that the CCPA would moderate the hike significantly. “In comparison to what was being demanded earlier, the final hike would be marginal," said a government official.
Agency reports quoted sources saying the hike may be Rs 4 to 5 a litre for petrol, Rs 2-3 for diesel and Rs 20 for a gas cylinder.
On his part, the CPM's Sitaram Yechury said in Srinagar that his party would strongly oppose any hike.