Fuel hike: Time for tough decisions

Petrol's price was raised by Rs 4 a litre while diesel would cost Rs 2/litre more.

india Updated: Jun 06, 2006 03:55 IST

In the biggest-ever increase in fuel prices, the government on Monday raised the price of petrol by Rs 4 per litre and of diesel by Rs 2. The price of liquefied petroleum gas cylinder and kerosene oil remains unchanged.

In the decision to hike prices of petrol and diesel lies an unmistakable message for the Left parties.

Sources close to Prime Minister Manmohan Singh told HT he felt that meeting high expectations from the 8.5 growth rate and sustaining several other positive indicators would not be possible without facing difficult situations head on. The result: the decision to raise petro prices in the face of the Left's opposition — underscored in a note it addressed to Singh on Monday, outlining measures other than a hike.

"The elections to state assemblies are over and the PM felt it was time to move forward," said a source. He said Singh decided not to kowtow to the communists' unreasonable demand, especially when the gap between domestic and international prices has left oil PSUs bleeding.

The sources said that during the weeklong recuperation after the wrist surgery he underwent on May 28, Singh found time to meet senior officials and party colleagues, including UPA chairperson Sonia Gandhi.

They said that the tough decisions Singh intended to take would balance the common man's interests with the demands of the economy.

The sources said the Left Front partners had to decide whether they wanted a functional or a dysfunctional government. The PM accommodated them by holding back the decision on oil prices till the assembly polls. But they are not willing to concede anything in return.

Anticipating the Left's reaction to the hike and to avoid a direct face-off with his outside supporters, the PM, the sources said, had cancelled his visit to Kolkata next week to lay the foundation stone for the Indian Institute of Sciences.

Talking to newsmen after the cabinet meeting in which the decision to hike fuel prices was taken, Petroleum Minister Murli Deora downplayed possible Left opposition to the move and said the decision was not inflationary.

Starting Tuesday, the price of CNG too will go up — from Rs 18 to Rs 19.20 per kg. That is, it will cost more to travel by bus, auto, and taxi in Delhi.

"A 20 per cent increase in the input cost of natural gas and a hike in taxes and other input expenditures have resulted in the move," Indraprastha Gas Ltd, the company retailing CNG in Delhi, said in a statement.

First Published: Jun 05, 2006 18:57 IST