Petrol prices jacked up - Inevitable says PM

New Delhi, 5th June, 2008:  After a lot of dilly dallying the Indian Government has finally announced a modest hike.  Petrol price is up by Rs. 5/-, Diesel by Rs. 3/- and LPG by Rs. 50/-.  This is probably the steepest hike ever. 

The Prime Minister Dr. Manmohan Singh addressed the nation on TV and tried to explain the increase.  He and the Petroleum Ministry had been citing the rise in the global prices of crude and today he said that the decision to hike the prices was unpopular but inevitable to ensure un-interrupted supply of petroleum products.  He also said that that there are limits to which we can  keep consumer prices unaffected by rising import costs. The petroleum companies both in the private and government sectors  have incurred heavy losses to the tune of Rs. 2, 45, 305 crores and would stand to benefit Rs.21,153 crores from the hike.

The decision drew flak from friend and foe alike; the Left have sounded the war cry and everything has come to standstill in West Bengal, Kerala and Tirpura, even school exams were postponed, people were stranded at Railway stations and Airports.  They said that their alternative proposals were ignored completely, well almost, the proposal they implemented was the abolishing of the 5% import duty on crude oil.  They said that with people already suffering from the steep rise in essential commodities this move would only aggravate the situation. 

The BJP led the opposition attack held the Government could have done more to avoid the steep hike.  The BJP which is actually gearing up for elections grabbed the opportunity and blasted the government for putting such a heavy burden on the common man.  They also threatened to protest and strike till prices are brought down. The only positive on the fuel front is the fall in the price of aviation fuel by 6% and consumers can expect a fall in air fares.

The UPA allies were unhappy with the decision asked for a rollback of prices.  Even YS Rajashekhar Reddy the Congress Chief Minister of AP was pleading with the center for a rollback.  The AP government has committed itself to Rs.2/kg rice scheme and have been announcing various projects and other schemes for the state and may not be in a position to implement the party chief Sonia's proposals to share a part of the centers burden. 

Meanwhile the UPA chairman and Congress party chief Mrs. Sonia Gandhi in a damage control move instructed the Congress ruled states to cut sales tax (Value Added Tax) .  The state governments can cut prices by Rs. 2 on petrol by cutting VAT .  The West Bengal and Maharashtra governments have done away with VAT till the impact of the hike is neutralized..




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