Notwithstanding objections raised by the Trinamool Congress, the Union government on Friday decided to increase the price of diesel by Rs. 3 a litre, kerosene by Rs. 2 a litre and domestic LPG by Rs.50 a cylinder.
The increase will be effective from midnight on Friday.
The government also slashed the Customs duty on crude oil and all other petroleum products by five percentage points. The excise duty on diesel was reduced from Rs. 4.60 a litre to Rs. 2 a litre. These two decisions will entail a revenue loss of Rs.49,000 crore.
“The hike in the prices of the three commodities will lead to a revenue gain of Rs. 21,000 crore to the oil marketing companies (OMCs), which are suffering huge under-recoveries that are being projected at Rs.1,70140 crore in 2011-12. The under-recoveries will now come down to Rs.1.20 lakh crore,” Petroleum and Natural Gas Minister S. Jaipal Reddy told journalists after a meeting of the Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee.
The EGoM took the much-deferred decision, Mr. Reddy said, to cut down the burgeoning under-recoveries of the OMCs.
The Trinamool Congress had opposed any increase in the prices of petroleum products, especially those of kerosene and LPG.
The petrol prices were hiked in May.
Very modest: Pranab
Describing the increase in fuel prices as “modest,” Mr. Mukherjee expressed the hope that the State governments would reduce their taxes to provide relief to consumers.
“[It is] very modest increase. I have taken the risk of reducing the duties substantially ... I think it will be around Rs. 49,000 crore on account of the reduction of import duty and also the excise duty,” he said.
Left to protest
Left parties said they would organise nationwide protests against the “completely unacceptable”increase.