New Delhi/Kolkata, Nov 4
Forced on the backfoot by mounting outrage over yet another hike in petrol prices and Mamata Banerjee threatening to pull out of the UPA, the Congress today indicated it might be willing to provide a ‘healing touch’.

But the hiatus between the Congress and the government remained sharp as ever. The Prime Minister, who is away at Cannes, defended the price hike and told reporters that market forces ought to be allowed to fix the prices. At home, Union Finance Minister Pranab Mukherjee shrugged off the hike by pointing out that petroleum prices had been deregulated and it was up to the oil companies, and not the government, to regulate prices of petrol unlike diesel and LPG.

The confusion was confounded by the Indian Oil Corporation (IOC), which stated that while oil companies were not planning any rollback of prices, they would be willing to reduce the prices if directed by the government to do so. Being public sector units, explained IOC chairman R.S. Butola, the companies would be bound to go by the directive. Even as Butola was making the statement, the Economic Advisor to the government, Kaushik Basu, stated that deregulating diesel prices would help ‘cool’ inflationary pressures in the long run, indicating that a hike in diesel prices could be imminent.

The government also reeled as the Kerala HC lashed out at the ‘frequent price hikes’ in petrol prices and observed that the Union and the state governments could not afford to wash their hands off the crisis. The HC ordered IOC and Reliance to submit their balance sheets within three weeks.

Meanwhile, Kerala government announced it would forgo its share of taxes from the last raise, thus reducing petrol prices in the state by 37 paise a litre. There was also speculation that the government might take recourse to reducing central excise on the fuel, which at the moment amounts to Rs 14 per litre.

Union Commerce Minister Anand Sharma, who was in Kolkata and attended a meeting with industrialists, found himself at the receiving end of the West Bengal Chief Minister's ire. He later told reporters that Mamata Banerjee had voiced her views 'frankly' and he would convey her sentiments to the Prime Minister.

Banerjee herself did not mince her words. The Parliamentary Party of Trinamool Congress, she said, had met and resolved to withdraw support to the UPA. Incensed at not being consulted or taken into confidence over the petrol price-hike, she complained of poor cooperation and coordination within the UPA. The allies were not being consulted, she fumed, and her ministers were unable to raise concerns of the Aam Aadmi. " Whenever Dinesh Trivedi tries to raise these issues, he is silenced in the cabinet meetings," she added.

She had put the decision to walk out of the UPA on hold because the Prime Minister is away. An appointment has been sought, she said, and warned that the current situation could not be allowed to continue. Pointing out that Trinamool Congress had 18 MPs in the Lok Sabha and happened to be the second largest constituent of the UPA, she declared, “ in West Bengal, we have a two-third majority in the Assembly but if we pull out from the UPA, the central government might fall”.

Oil companies, in desperate damage control mode, tried to justify the hike by saying that since the Rupee had depreciated from Rs 45 to Rs 49 to a Dollar, the cost of importing crude had gone up to $ 110 a barrel from $85.09 last year. Every depreciation by a Rupee, they claimed, cost oil companies a loss of Rs 8,000 crore annually. The oil companies also let out that ‘under-recoveries’ by oil companies, which stood at Rs 78,190 crore last year, are likely to increase to Rs 132,000 crore this year.