Fuel price decision on hold, govt wants allies on board | delhi | Hindustan Times
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Fuel price decision on hold, govt wants allies on board

The government sought to bring its allies on board before taking a formal decision on hiking fuel prices.

delhi Updated: Feb 11, 2010 01:26 IST
HT Correspondents

The government sought to bring its allies on board before taking a formal decision on hiking fuel prices.

But, the Congress Core Group, which includes Prime Minister Manmohan Singh and Congress president Sonia Gandhi, did not take up the issue when it met on Wednesday.

The reason: Petroleum Minister Murli Deora, who was supposed to make a presentation, was not there.

Deora instead was busy conferring with key UPA allies, including the DMK and the Trinamool Congress.

He met Telecom Minister A. Raja and also spoke over phone to Railway Minister Mamata Banerjee, explaining the “precarious” situation that state-owned oil firms would be in, if fuel prices were not hiked.

There was no word on how the allies reacted.

Even if a hike is seen as inevitable, they are bound to be upset, particularly with assembly elections slated in their bastions in Tamil Nadu and West Bengal in 2011.

The final seal of approval on the exact fuel price hike will be known only once the Cabinet approves it. But indications from within the oil ministry, however, suggest that the government may either completely free petrol prices or fix a price band that will translate into a hike of Rs 2 to Rs 4 a litre.

Considering the cascading impact diesel prices will have on inflation and food prices, the proposal to free diesel prices has not found favour.

“The government, currently battling high inflation, may not accept the recommendation on freeing diesel prices,” said a senior UPA minister referring to the Kirit Parikh committee recommendations on freeing petrol and diesel prices.

The inflation rate stands at a worrisome 7.3 per cent, with food inflation galloping at a politically-unviable 17.6 per cent.

Instead, the hike in diesel prices may be limited to Rs 1 to Rs 2 a litre. Cooking gas and kerosene prices will also be hiked marginally not keeping in line with the recommendations of the Kirit Parikh panel on fuel pricing.

The panel had suggested a steep Rs 100 a gas cylinder and Rs 6 a litre hike for kerosene.

On its part, the Congress on Wednesday hinted of a possible hike in fuel prices, maintaining that such increases were sometimes unavoidable.

“As long as there is no domestic or international compulsion, prices should not be increased. Even if compulsion is there, the prices should be increased by minimum in actual terms,” spokesman Abhishek Manu Singhvi said. The focus of the Congress, he said, continues to be aam admi (common man) and if the hike is demonstrably unavoidable, it has to be bare minimum. He added that the party’s input is the main input in such cases.