Fuel prices set to crush festive cheer

  • HT Correspondent, Hindustan Times, New Delhi
  • Updated: Sep 03, 2013 02:58 IST

This promises to be a very expensive festival season. From holidays to commuting to meals to even the mandatory mithai (sweets) - everything is expected to cost more thanks to already implemented or impending increases in the prices of aviation turbine fuel, cooking gas, diesel and kerosene.

Oil companies on Monday increased ATF (Aviation Turbine Fuel) prices by a steep 6.9% taking the fuel, which constitutes 40-50% of the operational costs of Indian airlines, to a lifetime high of Rs 75,031 per kilolitre.

And a senior official said the government may hike the prices of diesel by Rs 3-5 per litre, LPG by Rs 50 per cylinder and kerosene by Rs 2 per litre after the ongoing Parliament session ends on September 6.

"This (ATF price) increase comes just ahead of the peak travel season beginning October when fares are anyway at their peak and will make tickets even more costly. Fares may go up 30%-50% in the coming weeks," said a senior executive of a low-cost carrier.

"Airlines will have to pass this increase on to passengers if they have to survive," added Rajji Rai, advisor to the Travel Agents Association of India.


Meanwhile, under attack from the Opposition as well as industry over his proposal to shut petrol pumps at night to curb fuel demand, oil minister Veerappa Moily backtracked, saying the government is not considering any such move.

"We have already made it very clear it is not our idea. It is an idea that came from the public and others. No decision will be taken to keep petrol pumps dry in any part of the country," he told reporters in New Delhi. Earlier, the Prime Minister had reportedly rejected this suggestion.

The LPG, kerosene and diesel price hikes will pinch household budgets. Then, the diesel price increase will also fuel inflation and increase general price levels across the board.

However, these price increases together would bring down the government's fuel subsidy outgo to Rs 50,928 crore from Rs 97,500 crore and help it contain the fiscal and current account deficits that are responsible for the 20% fall in the rupee's value against the dollar.

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