New Delhi, February 14
In a move that could send the prices of food articles and inflation soaring, the government today hiked the retail price of petrol by Rs 2 per litre and diesel by Re 1 per litre. This move will benefit the beleaguered oil marketing companies (OMCs) hit by rising global crude prices.
“The new prices will be effective from midnight tonight”, petroleum minister Murli Deora said. The government had last increased fuel prices on June 6, 2006.
“The OMCs will benefit by Rs 840 crore from the fuel price hike”, petroleum secretary M. S. Srinivasan said.
When asked about the impact of hike on the consumers, the oil minister said, “we have taken that into consideration and raised the prices moderately”.
The move will have a cascading impact on the prices of essential commodities, including pulses and food items, which have been moving up since the past one month.
Analysts say it’s going to be difficult for the government to control inflation in the coming months, and will also hit its electoral prospects for the coming state elections.
When asked why the move did not include duty cuts, he said the finance minister was not ready to roll back the duties.
Industry chamber PHDCCI has condemned the oil price hike and said, “At a time when industry is facing a deceleration in performance and inflation has been inching upwards, the rise in petro prices will further affect the bottomline of the companies”.
Petrol in Delhi will now cost Rs 45.52 per litre and diesel will be priced at Rs 31.76 per litre. The domestic crude basket is trading at $90.88 a barrel.
It may be recalled that oil bonds worth Rs 6,362.25 crore had been issued to the Indian Oil Corporation, while Bharat Petroleum Corporation got bonds worth Rs 2,539.13 crore and Hindustan Petroleum Corporation received bonds worth Rs 2,355.54 crore. The three government-owned OMCs were losing Rs 69,753 crore on sale of petrol, diesel, LPG and PDS kerosene as the government did not allow them to raise prices in line with the price of imported crude.
