Saturday, June 25, 2011

Diesel Price Hike

The government on Friday raised diesel, kerosene and cooking gas prices by Rs 3 a litre, Rs 2 a litre and Rs 50 a cylinder, respectively - a move bound to have a domino effect on most expenses, from transport to food, and push inflation into more worrisome levels. A slew of duties on petroleum produ
cts were also slashed, which would erode government revenue but saved the consumer from an even steeper hike.

The new prices came into effect Friday midnight.
The steep hike - barely a month after a Rs 5-a-litre petrol hike - will pinch household budgets, already pummelled by soaring prices of food items and essentials.
The surge, especially in diesel, will add to inflationary pressures. High diesel rates directly impact prices of food and essentials as cost of ferrying products goes up.
India's wholesale prices-based inflation in May was 9.06% - the highest among major Asian economies.
The government abolished the 5% customs duty on crude oil and slashed import duty on all petroleum products to 2.5% from 7.5%. It also cut excise duty on diesel to Rs 2 per litre from Rs 4.60 per litre.
Petroleum minister Jaipal Reddy described the price hike as "moderate and very minimal," and said the duty rejig would cost the government an estimated Rs 49,000 crore.
He obliquely nudged state governments to reduce local duties that would bring down prices.
UPA allay Trinamool Congress distanced itself from the hike.
"We don't support repeated rise in fuel prices," said its chief Mamata Banerjee.
The BJP called the hike unprecedented and cruel while the CPI-M said it comes at a time when people are already reeling under an unbearable price situation.
The new prices, however, will prevent oil subsidies from mounting. They will benefit oil companies by Rs 21,000 crore.
Petroleum ministry sources said the fuel price hike has been timed with the fall in global crude oil prices.
Crude prices fell 6% on Thursday after major consuming countries announced an emergency release of oil stocks, pushing crude to a four-month low.