With public anger running high over the recent high profile scandals and the ongoing political uncertainty in the wake of controversy surrounding yoga guru Baba Ramdev’s agitation against corruption and black money, the Centre has decided to defer a decision to hike the prices of diesel, cooking gas and kerosene.
A crucial meeting of the empowered group of ministers (EGoM), scheduled for Thursday to consider hiking the prices of auto and cooking fuels stands cancelled.
On cards was a decision to hike the diesel prices by Rs 2 a litre, cooking gas (LPG) by Rs 25 to 35 a cylinder along with a Rs 3 a litre increase in kerosene prices.
“The fuel price hike was to be discussed at the Thursday meeting of the EGoM, which has been put off because of the political crisis,” a senior Congress leader and member of the EGoM told HT.
While a hike in fuel prices will help the Centre meet its fiscal deficit target of 4.6% GDP for 2011-12, the move will also stroke inflation, which at 8.66% in April is above the Central Bank’s comfort zone of around 5%. Any hike in diesel price has a direct impact on food and essential commodity prices.
The finance ministry has budgeted a fuel subsidy bill of $5.2 billion for 2011-12, assuming global crude oil prices to be below $100 a barrel but the global oil prices are currently hovering above $115 a barrel.
State-owned oil firms last month increased fuel prices by a steep R5 a litre and have been pushing for a hike in diesel and cooking gas prices in the backdrop of huge losses resulting in the wake of high crude oil prices in the international markets.
The rates of diesel, LPG and kerosene were last hiked in June 2010. Diesel was hiked by Rs 2 a litre, cooking gas by R35 a cylinder and kerosene by Rs 3 a litre.