New Delhi, Jun 4 (UNI) After dithering for months, the government today finally took a plunge announcing a hike of Rs 5 for petrol, Rs 3 for diesel and Rs 50 on LPG cylinder, but the unprecedented hike raised a political storm and hit the common man.
The Cabinet Committee on Political Affairs (CCPA), which met this morning, took a decision to hike prices of petrol and petroleum products as a part of the process to bail out the beleagured the Oil Marketing Companies (OMCs).
The under-recoveries of OMCs, which were to the tune of Rs 2,45,305 crore in current fiscal before the hike, would now be reduced to Rs 1,35,000 crore on account of cut in customs and excise duties as well as the price hike.
The burden on the exchequer on account of duty cuts would be Rs 22,660 crore and the price hike will benefit OMCs by Rs 21,123 crore.
Revenue Secretary P V Bhide said the government will issue oil bonds to the order of Rs 94,600 crore as part of the multi-pronged bail-out strategy.
Prime Minister Manmohan Singh took an unusual step to address the nation as to what necessitated the hike and the consequences of further delays in taking such an action.
Global crude oil prices have touched an all-time high of 135 dollars a barrel, but the government was reluctant to pass on the entire burden to the consumer, reeling under spiralling prices of essential commodities.
This compelled the government to work out a multi-pronged strategy, but the decision did not go well either with the political parties or public at large.
Dubbing the hike ''suicidal,'' the Left parties announced a dawn-to-dusk bandh tomorrow in the Left-ruled States of West Bengal, Kerala and Tripura as part of their week-long nationwide agitation against the decision.
The BJP and other opposition parties were quick to capitalise on the hike, with political pundits predicting that this would become a major issue in the year-end Assembly Elections.
Some States took a cue from the government's advice and announced a reduction in sales tax to bring down the burden on the consumer.
The first to do so was Maharashtra, and states like Andhra Pradesh and Kerala said they would take a decision on the matter soon.
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