Petrol price hiked by Rs 4, diesel by Rs 2 a litre

New Delhi, Jun 5 (UNI) The government today announced an unprecedented hike of Rs four per litre in petrol prices and Rs 2 per litre in diesel, but left the prices of kerosene and LPG unchanged, giving thrust to cost-push inflation, The decision drew immediate protests from the Left parties, supporting the UPA government from the outside, which had announced a nationwide agitation if the government went ahead with the hike.

The Left parties had been demanding that the the fuel prices be kept unchanged, with the government bearing the brunt of the increase in international crude oil prices.

The government, which had been dithering on a decision to hike the prices since September last year, was forced to bite the bullet to prevent the oil marketing companies from going into the red.

The ruling prices of Indian basket of petrol was 66.82 dollar a barrel and under-recoveries of the oil marketing companies had touched Rs 73,500 crore.

Addressing a Press Conference here after a special Union Cabinet meeting convened this evening to hike fuel prices, Petroleum Minister Murli Deora and Petroleum Secretary M S Srinivasan said the hike was the minimal possible and every effort had been made to protect the vulnerable and weaker sections by not increasing the prices of kerosene and cooking gas.

Mr Deora said the government has reduced custom duties on petrol and diesel from 10 per cent to 7.5 per cent, and it would issue another round interest bearing oil bonds totalling Rs 28,000 crore.

The Cabinet also decided to accept the Rangarajan Committee recommendation on moving over from import parity prices to trade parity prices, and Mr Srinvasan said the government would accept the other recommendations of the Committee in a calibrated manner.

The minister, however, denied that the hike would upset individual and family budgets as well as give vent to cost-push inflation by increasing freight charges.

''The government has shown remarkable sensitivity to the needs of the farmers by keeping the diesel price hike as low as possible,'' he said.

Mr Deora said the government would explain its compulsions to the left parties for effecting the hike.

''We will discuss with the left parties. They are our coalition partners and we hope that they will understand our compulsions. If they take to the streets against the price hike we will approach them with garlands,' he said.

The minister was confident that there would be no roll-back as the price hike had been minimal.

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