Soaring global crude prices that hit $100 are a concern, India's oil minister said on Thursday, and the government could raise domestic fuel rates or cut duties to ease losses at state-run oil retailers.
India caps prices of widely consumed fuels to protect the poor and help trim inflation and did not increase rates of petrol and diesel in 2007 despite global crude roaring to a series of historic highs, jumping by more than half over the year.
"Price hike is not the only solution. There could be duty cut as suggested by the left (parties). We have got to find the best solution," Murli Deora said. He gave no further details.
On Wednesday, a senior official in the oil ministry said a moderate increase in prices of key fuels was likely in early February, after a meeting later this month of key ministers looking into the pricing of commodities. Any increase could lead to a rise in inflation.
Oil dipped after leaping to a lifetime high of $100 a barrel on Wednesday fuelled by expectations of thinning US stockpiles. India imports two-thirds of its crude oil needs, and Deora said that it should look at ways of cutting oil consumption. "We need to tighten our belts and curb consumption," he said.
Deora added that left parties, which provide the government with a parliamentary majority and often oppose price rises that affect India's poor, have assured officials they will co-operate in efforts to ease the impact of sky-high crude.
"They said they will co-operate with us in finding a solution which will be good for the country. Various options are being considered," he said of left leaders.