Indian Union cabinet to discuss proposed hike in fuel prices

Thursday, February 11, 2010, 14:33 by Business Editor

Murli Deora, Union Minister for Petroleum, held consultations with political parties, including partners of the ruling United Progressive Alliance (UPA), prior to taking the proposal to raise the prices of fuel to the Union Cabinet, possibly on February 11, 2010.

Murli Deora met A Raja, Minister for Telecom and senior leader of the DMK, an ally of the UPA, as a part of the efforts to build consensus among the partners of the UPA to deregulate the prices of petrol and diesel as also to raise marginally the prices of kerosene and cooking gas (LPG).

According to sources, A Raja, who was non-committal on the proposal to raise the fuel prices, told Murli Deora that DMK chief M Karunanidhi will take a stand on the recommendations of the Kirit Parikh Committee.

The Kirit Parikh Committee had recommended freeing the prices of petrol and diesel from administrative control as well as huge increases in the prices of kerosene and LPG. The panel had suggested that the price of kerosene be increased by Rs 6 a litre (or, two-thirds) and that of LPG by Rs 100 a cylinder.

The DMK and the Trinamool Congress argue that increasing the prices of fuels will boost inflation as well as worsen the troubles of the common man, already burdened by the exorbitant rise in prices of essential commodities.

A core group of the Congress party, which includes Prime Minister Manmohan Singh and Congress president Sonia Gandhi, is getting ready to discuss implementation of the report of the Kirit Parikh Committee as well as the immediate measures to be taken in order to ease the burden of fuel subsidy on the Central Government.

Media reports quoted sources as saying that the Ministry of Petroleum is likely to accept the Kirit Parikh Committee’s recommendation to free the prices of petrol and diesel prices from administrative control, but would wants only moderate increase in the prices of kerosene and LPG.

The Ministry of Petroleum is reportedly demanding a minimum of 50% increase in the hike recommended by the Kirit Parikh panel.

According to officials, the Ministry of Petroleum is seeking to raise the retail price of petrol by Rs 3 a litre and that of diesel by about Rs 2 a litre.

The Petroleum Ministry, say the officials, have suggested that the price of kerosene be hiked by Rs 3 a litre and that of LPG by Rs 50 a cylinder.

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