‘We will watch global crude prices and rupee rate before taking final decision’
Despite street protests and condemnation by political parties, including the ruling Congress, Petroleum and Natural Gas Minister Jaipal Reddy on Friday ruled out withdrawal of the steep increase in petrol price. He, however, said the government would review the situation within a few days.
“We will watch the international crude prices and the rupee-dollar rate for a few days before taking any decision on cutting the rates. I seek the cooperation of all political parties on the issue of oil prices. Finance Minister Pranab Mukherjee and I will hold consultations with the Chief Ministers very soon to try to come to a common understanding on taxing petroleum products at the State and Central levels,” he told journalists here.
Mr. Reddy said he had been urging Mr. Mukherjee to convene a meeting of the Empowered Group of Ministers (EGoM) to discuss the high subsidy on domestic LPG diesel and kerosene. He defended the petrol price increase by the oil marketing companies, saying they had exhausted all options. “All political parties, including my own party [the Congress], are populist. But we cannot run the country on populist sentiments.”
The oil companies lost more than Rs.7,100 crore in the past two years on petrol sales, though they had the freedom to adjust the rates in line with the cost. In April and May this year, they lost Rs. 2,330 crore.
“We are duly conscious of the sense of disturbance among consumers. The hike was necessitated by the double disaster of devaluation of the rupee against the U.S. dollar and the increase in international oil prices. There is a downward trend in international oil prices, but it will be hasty to arrive at a conclusion that retail… prices can be reduced on the basis of this trend of a few days. We are not able to take a definitive view because there is a lot of volatility in the value of rupee vis-à-vis the dollar and the volatility in prices of crude oil,” he said.
“We, in the Petroleum Ministry, have decided to watch the situation for just a few days. When I say a few days, it is not weeks. We want to know if the falling prices of crude oil are a stable trend. We will certainly come back to you with our viewpoint very soon on the issue of review,” he said.
Asked about the opposition to the hike from within his own party, he said the Congress was also a political party, and like others, it did not want to advocate unpopular causes, even if they were unequivocal.
Gasoline price, against which the petrol price has been benchmarked, has come down from $124 a barrel (which was the basis of Wednesday's increase) to $117. The rupee has rebounded to 55.37 on Friday.
Congress Core Group meets
Meanwhile, the Congress Core Group met in the evening to discuss the political fallout of the price increase. No decision was taken as it was felt that Mr. Reddy had conveyed what the government had to say for the moment.
Keywords: petrol price hike
What UPA can do other than rising the cost of essential commodities?
Now its a serious doubt whether govt has the real calibre to tackle
the inflation... its so obviously seen that almost all oil rich
nations are in trouble in one-way or the other, which escalate the
cost... and so this is going to be an ongoing issue ever.... I dont
think you need to go all the way to cambridge/oxford university to
understand this simple economics. Its right time to bring an austerity
measures at bureaucratic level first.
1) Reduce convoy
2) Reduce security guards to ministers [anyway no one will touch them]
3) Reduce there frequent travel to hometown
4) Stop sending them overseas...
5) Reduce there salary [anyway they know how to make money, and they
are making money]
etc....
which would potentially reserve fund and make use of the fund in
balancing inflation.
Viswanth
as you are talking to induce new transportation system in Indian infrastructure, here also big people who is sitting on power will
think of earning own profit instead of thinking for common people.
they cannot do any great thing for the development of nation. till the
time they are in power, they think it is the only time to earn more
money. i don't know why the fuel cost are low in other poor countries
and our Indian companies making loss even after selling its products
at very higher rates. either our technology is too poor or other
countries are smarter.
As a country that is devoid of any significant oil wealth, we simply
cannot sustain this level of private ownership of vehicles.
Considering our pathetic road infrastructure and the precarious
economic situation, the government should do everything it can to
discourage private ownership and instead improve our public
transportation system. The metro rail in our cities are a step in the
right direction. The time is also ripe for our government to allow the
private sector to run city buses. Decades of government monopoly in
city transport has proven time and time again the inefficiency and
apathy with which they are run. Allowing private buses will put more
buses on the road and will go a long way in relieving congestion in
our roads. It is no exaggeration to say that half the fuel consumed is
wasted by vehicles idling or moving at a snail’s pace in a traffic
jam.
reply to Ramesh,: my friend i disagree with your contention in regards to special tax impose on the owner of diesel car or hike diesel price. my friend, if we increase diesel price, it will affect every citizen of country. because our transportation is only rely on diesel vehicle. so if government increase diesel price, it will automatically transportation become costly and thereafter, transportation rate will be added with manufacture price hence, rate of products become high. therefore, it is good things at present that government has not hiked diesel price.
Decision of UPA II to hiked the price of petrol at the time when they have just completed three year as in central government. i think this is rather big gift for citizen of India at the time of celebration of II term by UPA. wake up .....Indians....the policy of UPA government towards the petroleum is always being subjected to capitalism. they are only wants to give benefit to big corporate house not poor citizens,,,,,,,,,since UPA I{2004}, their policies have always been against the poor person and pro- corporate.
This situation shouldn't be a surprise or shock to people anymore. After the government has given control to the private petroleum producers to determine the rates, they no longer have any control over the prices. Though the petroleum producers cry that they are at loss, obviously they will not reduce the profit margins they've been earning so far. We need to learn how to manage the situation in several ways:
1)Families already having 2-wheelers and cars should stop buying more.
2)Flaunting more vehicles in a family as a show of status should be despised.
3)Car and two-wheeler pooling should be encouraged, tracked systematically and tax incentives should be given.
4)Public transport, electric-driven vehicles and use of bicycles should be encouraged.
6)Like private companies which implement fuel-economy to earn green profits, the government departments should lead by example.
India should set itself a target to reduce petroleum energy consumption by 10% from now on.
It is unfair that only part of consumers have to bear the brunt. If Govt could not find way to increase price of diesel for diesel car users alone, let them put a special tax of two lakhs for every diesel car and give it to petroleum companies instead of dumping the whole deficit on petrol consumers alone. If petroleum ministry is not taking it up immediately, Petrol consumers should form an association and put a PIL to remove this unjustice.
A sound decision. There is no other go. We have to foot the bill. Let
those who consume petrol, bear the cost. They can't sweep every thing
under the subsidy 'rug' and make the tax payers cough them out. As long
as we use the subsidy to cover up our extravagance, our budget is phony
and can not be said to give a true picture of the realities.
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