By IANS
New Delhi : India’s cabinet Thursday gave its approval to a hike of Rs.2 per litre on petrol and Rs.1 per litre on diesel to ease the burden on oil firms, even as Left parties called for nationwide protests against the move.
After much debate at the political level, including discussions by an empowered group of ministers, the Cabinet Committee on Prices, which met here under Prime Minister Manmohan Singh, finally decided to approve the long-awaited hike.
“The price changes are effective midnight,” Petroleum Minister Murli Deora told reporters here after the meeting. He had maintained that without the price hike petroleum companies would lose $18 billion this fiscal.
Normal unleaded petrol currently retails at Rs.43.52 rupees a litre and diesel at Rs.30.48 litre in the national capital. The prices vary across the country, depending on the level of sales tax imposed by various states.
Officials in the petroleum ministry said the cabinet also approved a hike in the oil bonds issued to oil marketing companies to offset their losses to 57 percent of their total under-recoveries (sale below cost price) from 42.7 percent.
The last hike in transport fuel prices was in June 2006, when crude oil prices were at around $65 per barrel, after which it ballooned to $100 a barrel, resulting in oil companies accumulating huge losses.
India imports over 70 percent of its crude oil and the successive increases in international prices have hit oil marketing firms hard. Against a demand for 130 million tonnes of crude, the country imports 102 million tonnes, officials said.
Last month, the government had approved bonds worth $2.87 billion to help state-owned oil marketing companies to reduce their losses in the current fiscal due to their inability to sell fuel at market prices.
This was in addition to bonds worth $5.97 billion announced earlier for the same purpose to the three state-run oil-marketing firms, Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum.
The Left parties, however, did not take kindly to the government’s decision and said the move would further burden the average citizen, who is already reeling under inflation.
“The government has miserably failed. The government has not listened to us. We are calling our party members to immediately go on protest across the country,” Communist Party of India general secretary D. Raja said.