Fuel price hike in India imminent as deliberations continue

June 2nd, 2008 - 8:48 pm ICT by IANS  

A file-photo of Manmohan Singh

New Delhi, June 2 (IANS) After making it amply clear that a hike in fuel prices was inevitable, Prime Minister Manmohan Singh Monday held another round of discussions on the vexed issue, including a meeting with Planning Commission Deputy Chairman Montek Singh Ahluwalia. The meetings followed after deliberations with United Progressive Alliance (UPA) chairperson Sonia Gandhi Sunday during which a fuel price hike was virtually decided, sources said.

“They discussed the pros and cons of a demand for hiking fuel prices from state-run oil companies,” an official in the Planning Commission said, referring to the meeting between Manmohan Singh and Ahluwalia.

“The official agenda for the meeting was climate change,” the official added.

The meeting between the two prominent economists comes close on the heels of the prime minister’s remarks that India cannot allow the “subsidy bill to rise any further” in view of soaring price of crude oil in the international market.

Ahluwalia also discussed the issue with Petroleum Secretary M.S. Srinivasan and his finance counterpart D. Subba Rao.

“The government could announce the hike any moment,” an official in the petroleum ministry said, adding that alternatives on the quantum of the hike were being discussed.

The prime minister had earlier called for a wider political consensus on issues of importance for the country while addressing the annual summit of leading industry lobby, the Associated Chambers of Commerce and Industry (Assocham).

“This situation cannot continue forever. We need, therefore, wider political consensus to adopt more rational economic policies,” he said, adding: “Up to a point, we can insulate poor sections of our society and we have done that”.

State-run fuel marketing companies like Indian Oil Corp and Bharat Petroleum have threatened that their collective losses on account of selling fuels below cost could balloon to Rs.200 billion ($5 billion) by the end of this fiscal.

The prices of transport fuel was last increased in February after 20 months.

The issue of fuel price hike had come up for discussion at the Congress Working Committee (CWC) meeting Saturday and has been a major issue of concern for political parties, including the Left that supports the ruling coalition from outside.

Global crude oil prices topped $135 a barrel and now rule at around $125, causing losses to oil marketing companies. The oil companies raised the prices of aviation fuel by 18.5 percent Saturday.

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