India's fuel price hike divides rich and poor

Indians were divided on Wednesday over the biggest hike in fuel prices in 12 years, with the poor saying it would hit their pockets hard, while the more comfortable shrugged it off as inevitable given global trends.

On the streets of the capital, New Delhi, Balaram, an office driver earning a little over $100 a month, and businessman B. Hans were in opposite corners.

While Balaram worried how to afford now more expensive cooking gas from his tight household budget, Hans, who drives a Mercedes, was more relaxed but said a lower rate of increase would have been good for those less well off.

"Already milk, vegetables, wheat -- the price of everything has gone up so much," Balaram said.

"And now gas and petrol. With my salary, after paying my rent and my expenses, what will I send home? How will I feed my family and what will I save?"

India raised prices of petrol and diesel by about 10 percent and a cylinder of cooking gas by 17 percent after its state-run oil companies said they were on the verge of bankruptcy, hammered by crude oil’s race to record highs while having to sell fuels at heavily discounted prices.

The government spared kerosene, used by many of India’s 1.1 billion people for cooking and lighting. A litre of diesel, the popular auto fuel, will now cost 34.5 rupees ($0.8) in Delhi.

"Well, what can I say? We have to pay, you see, even if we don’t like to," Hans, whose monthly fuel bill is more than Balaram’s salary, said.

Salaried families, hit in recent weeks by fast rising food prices which have pushed inflation above 8 percent, said they were looking to cut corners to absorb the fuel price hike.

"We have to cut down on other expenses such as eating out and things for yourself because it’s not in your budget anymore," Bina Chadha, a government worker, said.

"I suppose we’d have to think twice about taking a long-distance trip with the car," said Joaquim Johnson, a 38-year-old trainee counsellor.

MINEFIELD

The increases could prove a political minefield for the ruling coalition ahead of a general election next year.

Add to that inflation already running at a 3-½ year high and the opposition seem to have an upper hand if Kolkata housewife Tapasi Bose is to be believed.

"It will become very difficult for us to make both ends meet," Bose told Reuters. "The price rise will affect the fortunes of the rulers in the next elections."

But some understand the government’s compulsion. "It’s inflation. You can’t blame the government," said Suresh Rathod, a 33-year-old auditor at a law firm.

"We are helpless. Another government would have not made any difference," Subrata Roy, an IT executive in Kolkata, said.