New Delhi: The UPA government is under immense pressure to rollback the hike in diesel prices announced on Thursday, with furious allies and opposition parties condemning the decision and calling it ‘anti-aam aadmi move’.
The government had yesterday announced a hike in heavily-subsidised diesel price by Rs 5 per litre (excluding taxes) to check fiscal deficit and limited availability of cooking gas (LPG) cylinders per family to six per year. The hikes came into effect midnight yesterday.
It, however, left kerosene rates untouched and spared an increase in petrol price by cutting excise duty by Rs 5.30 per litre.
The government said that people can buy any number of LPG cylinders at the market rate over the capped number of six. While the price of subsidised cylinder will continue to be Rs 399 per cylinder in Delhi, the market rate (currently at Rs 746 per cylinder) will be notified by oil firms monthly.
The Cabinet Committee on Political Affairs (CCPA), chaired by Prime Minister Manmohan Singh, took the decision, which, sources say, was initially opposed by Sonia Gandhi.
TMC to hit streets
UPA`s second-largest constituent, Trinamool Congress, has demanded a rollback. Party chief Mamata Banerjee said she would have been very happy if she could have withdrawn support from the regime rather than be party to such "anti-people" policy.
Banerjee announced that her party will hit the streets against the anti-people decision, and threatened it wouldn`t "take her a minute to withdraw support" if the hike was not reversed.
"We want an immediate rollback otherwise we will be forced to take tough decisions. It will take a minute for me to withdraw from the government. If they say that they will increase the diesel price, then we have to rethink whether we will stay with the government or not," Banerjee said.
"We oppose such anti-people policy. I am shocked and disappointed. They have made a coordination committee but they don`t bother to discuss with the allies. I request the common people to take part in the rally," said Banerjee, also the West Bengal Chief Minister.
Another key UPA ally, DMK, also condemned the fuel price hike. Party chief M Karunanidhi said, "Already the prices of essential commodities are so high. This hike would further affect the poor and the middle class and increase inflation."
The NCP too opposed the hike, while demanding a rollback.
"The Centre should consider rollback in diesel price and should not put a cap on subsidised LPG, especially given the high prices of essential goods thereby affecting the common man," NCP spokesperson Nawab Malik said.
The Samajwadi Party too said it would hold a sit-in against the move.
"The move to hike diesel price is anti-people and will increase prices. Samajwadi Party opposes the move and will hold sit-in across the state to protest the hike," SP spokesman Rajendra Chaudhary said.
The BJP slammed the hike, saying it would have "cascading effect" of cost of essential commodities, resulting in further inflation and price hike.
"We strongly oppose and condemn the hike in diesel prices. The government has put diesel in the fire that is raging in the country because of coal allocation scam," BJP leader Ananth Kumar told reporters. "The hike will hit common man, farmers and workers."
Ananth Kumar said the cap put on the number of cylinders was also highly condemnable.
CPI-M leader Brinda Karat said the hike would only "further burden the people`s pocket" and slammed the government`s claim that the oil companies had poor recoveries.
CPI’s D Raja said his party "strongly condemned" the decision and called it a "huge blow" to the poor. Attacking the UPA government, he said it had "failed to control the prices and inflation" and the decision was "unjustified".
"I only hope the people come out on to the streets against the government and its decision," he added.
The Congress defended the government`s decision to hike the price of diesel.
Party general secretary Digvijay Singh said that the party was "solidly" behind Prime Minister Manmohan Singh and his government on this decision. "... sometimes, a good government may have to take unpleasant decisions too," he said.
The hike in diesel prices is expected to affect a wide gamut of transportation ranging from locomotives to heavy duty trucks.
The government cited financial compulsions to justify the controversial price hike, which could fuel inflation and burden the common man who is already reeling from spiralling prices of basic commodities.
In its defence, the government said diesel and cooking fuel prices have not been revised since June 2011.
Citing rising global crude oil prices and devaluation of rupee, Petroleum Minister S Jaipal Reddy had said on Wednesday that a hike in diesel, LPG and kerosene prices was "unavoidable" despite the "painful and difficult" nature of such an increase.
Prior to yesterday’s hike, state-owned oil firms were losing around Rs 550 crore per day on the sale of regulated diesel and cooking fuels and around Rs 16 crore per day on petrol.
Oil Marketing Companies (OMCS) have been selling diesel at a loss of Rs 19.26 per litre, kerosene at a loss of Rs.34.34 per litre and domestic LPG for a loss of Rs.347 per 14.2 kg cylinder.
"Diesel accounts for 53 per cent of total subsidies. Oil companies are running a deficit of Rs 6,000 crore every month. We are committed to cutting petrol prices whenever possible. By reducing excise duty on petrol, we have brought down the gap between the prices between petrol and diesel. A narrow margin between petrol and diesel will be good for economy. If prices of petrol fall internationally, we will pass on the benefits," said RS Butola, chairman of the Indian Oil Corporation.
"This is a very good decision, and will certainly help oil companies and reduce the burden on the government in terms of subsidies. The reduction in the excise duty on petrol is good for us," said Bharat Petroleum`s chairman RK Singh.
(With Agency inputs)