New Delhi: In a politically-sensitive move, the government Thursday announced a hike in heavily-subsidised diesel price by Rs.5 a litre to check fiscal deficit and limited availability of cooking gas cylinders per family to six per year. The hikes come into effect midnight Thursday.
The Cabinet Committee on Political Affairs (CCPA), chaired by Prime Minister Manmohan Singh, took the decision, which has been decried by a combative opposition and even allies as “anti-people”.
UPA’s second-largest constituent, Trinamool Congress, demanded a rollback, with party chief Mamata Banerjee saying she would have been very happy if she could have withdrawn support from the regime rather than be party to such “anti-people” policy.
The steep hike in diesel prices is expected to affect a wide gamut of transportation ranging from locomotives to heavy duty trucks.
The government cited financial compulsions to justify the controversial price hike, which could fuel inflation and burden the common man who is already reeling from spiralling prices of basic commodities.
The government however said diesel and cooking fuel prices have not been revised since June 2011.
Citing rising global crude oil prices and devaluation of rupee, Petroleum Minister S. Jaipal Reddy had said Wednesday that a hike in diesel, LPG and kerosene prices was “unavoidable” despite the “painful and difficult” nature of such an increase.
State-owned oil firms are losing around Rs.550 crore per day on the sale of regulated diesel and cooking fuels and around Rs.16 crore per day on petrol.
Oil Marketing Companies (OMCS) have been selling diesel at a loss of Rs.19.26 per litre, kerosene at a loss of Rs.34.34 per litre and domestic LPG for a loss of Rs.347 per 14.2 kg cylinder.
The Congress defended the government’s decision to hike the price of diesel.
Party general secretary Digvijay Singh said that the party was “solidly” behind Prime Minister Manmohan Singh and his government on this decision. “… sometimes, a good government may have to take unpleasant decisions too,” he said.
The Bharatiya Janata Party (BJP) slammed the hike, saying it would have “cascading effect” of cost of essential commodities, resulting in further inflation and price hike.
“We strongly oppose and condemn the hike in diesel prices. The government has put diesel in the fire that is raging in the country because of coal allocation scam,” BJP leader Ananth Kumar told reporters. “The hike will hit common man, farmers and workers.”
Ananth Kumar said the cap put on the number of cylinders was also highly condemnable.
The government later clarified that people can buy any number of cooking gas cylinders at the market rate over the capped number of six. While the price of subsidised cylinder will continue to be Rs. 399 per cylinder in Delhi, the market rate will be notified by oil firms monthly.
Communist Party of India-Marxist (CPI-M) leader Brinda Karat said the hike would only “further burden the people’s pocket” and slammed the government’s claim that the oil companies had poor recoveries.
Communist Party of India’s (CPI) D.Raja said his party “strongly condemned” the decision and called it a “huge blow” to the poor. Attacking the UPA government, he said it had “failed to control the prices and inflation” and the decision was “unjustified”.
“I only hope the people come out on to the streets against the government and its decision,” he added.
The opposition’s denunciation found support from Trinamool Congress. Banerjee announced that her party will hit the streets against the anti-people decision, and threatened it wouldn’t “take her a minute to withdraw support” if the hike was not reversed.
“We oppose such anti-people policy. I am shocked and disappointed. They have made a coordination committee but they don’t bother to discuss with the allies. I request the common people to take part in the rally,” said Banerjee, also the West Bengal chief minister.