Monday, June 20, 2005 (New Delhi):
Ending a seven-month freeze on fuel prices, the government today hiked petrol and diesel prices amidst stiff opposition from Left parties.
This was announced by Information and Broadcasting Minister Jaipal Reddy after the meeting of Cabinet Committee on Economic Affairs.
While petrol prices have been raised by Rs 2.50 a litre, the price of diesel has gone up by Rs 2 a litre.
This price rise will come into effect from mid-night tonight. The government, however, has kept the prices of kerosene and LPG unchanged.
Balancing act
With international crude prices touching a high of $56 a barrel, oil companies in India were losing Rs 70 crore a day.
Left with no choice and brushing aside protests from the Left and UPA partners including the Congress, the government hiked prices of petrol and diesel.
But the final decision arrived after several meetings with the Left and other UPA allies is a deft balancing act.
With public sector oil companies suffering heavy losses, Prime Minister Manmohan Singh had to handle a lot of demands.
While oil companies wanted a hike of Rs 4 to 5, a Cabinet note today recommended a similar hike. Besides Left parties, which had already made it clear that they are against any kind of hike, RJD wanted kerosene and LPG to be spared
Though the spike in global oil prices and increase in duties warranted a hike of Rs 4.68 per litre in petrol, the government settled for a Rs 2.50 a litre increase.
Similarly, diesel prices were hiked by only Rs 2 per litre despite the need to raise it by Rs 5.13 per litre.
Equitable sharing
"We have basically gone back to the principle of equitable burden sharing between the government, the consumers and the oil companies," Petroleum Minister Mani Shankar Aiyar told reporters after the Cabinet meeting.
The government has said that ONGC and GAIL will continue to bear the fuel subsidy bill.
Aiyar said despite the fuel price hike, under recoveries by oil companies will continue. He also said the revenue losses of oil companies will continue on account of high crude prices.
Monday, June 20, 2005 (New Delhi):
Ending a seven-month freeze on fuel prices, the government today hiked petrol and diesel prices amidst stiff opposition from Left parties.
This was announced by Information and Broadcasting Minister Jaipal Reddy after the meeting of Cabinet Committee on Economic Affairs.
While petrol prices have been raised by Rs 2.50 a litre, the price of diesel has gone up by Rs 2 a litre.
This price rise will come into effect from mid-night tonight. The government, however, has kept the prices of kerosene and LPG unchanged.
Balancing act
With international crude prices touching a high of $56 a barrel, oil companies in India were losing Rs 70 crore a day.
Left with no choice and brushing aside protests from the Left and UPA partners including the Congress, the government hiked prices of petrol and diesel.
But the final decision arrived after several meetings with the Left and other UPA allies is a deft balancing act.
With public sector oil companies suffering heavy losses, Prime Minister Manmohan Singh had to handle a lot of demands.
While oil companies wanted a hike of Rs 4 to 5, a Cabinet note today recommended a similar hike. Besides Left parties, which had already made it clear that they are against any kind of hike, RJD wanted kerosene and LPG to be spared
Though the spike in global oil prices and increase in duties warranted a hike of Rs 4.68 per litre in petrol, the government settled for a Rs 2.50 a litre increase.
Similarly, diesel prices were hiked by only Rs 2 per litre despite the need to raise it by Rs 5.13 per litre.
Equitable sharing
"We have basically gone back to the principle of equitable burden sharing between the government, the consumers and the oil companies," Petroleum Minister Mani Shankar Aiyar told reporters after the Cabinet meeting.
The government has said that ONGC and GAIL will continue to bear the fuel subsidy bill.
Aiyar said despite the fuel price hike, under recoveries by oil companies will continue. He also said the revenue losses of oil companies will continue on account of high crude prices.
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