No option but to hike fuel price: PM

Prime Minister Manmohan Singh on Monday said the government was left with no option but to hike the price of fuel due to soaring price of crude oil in the global market and asked for "wider political consensus to adopt more rational economic policies".

“We cannot allow the subsidy bill to rise any further. Nor do we have the margin to fully insulate the consumer from the impact of world commodity price and oil price inflation,” Manmohan Singh said at the annual summit of the Associated Chambers of Commerce and Industry (Assocham).

“Up to a point we can insulate poor sections of our society and we have done that. Our government has not raised the price of kerosene in the past four years. We have only marginally raised LPG and diesel prices. Even petrol prices do not fully reflect world trends.

"In the case of other national resources, especially water, we have been altogether imprudent. This situation cannot continue forever. We need wider political consensus to adopt more rational economic policies,” the prime minister said.

In view of the above, the petroleum ministry had even proposed to raise petrol prices by Rs 10 a litre, diesel by Rs 5 per litre and that of cooking fuel Rs 50 per cylinder to cut losses being incurred by the state-run firms. But the Left parties had categorically said they would oppose any move to hike prices of transport and cooking fuels since the average citizen was already burdened by high inflation.

However, all said and done, petroleum minister Murli Deora had indicated that they were concerned at the financial health of the PSUs, and "there are some measures that are under discussions," he had told the media.

We should also bear in mind that oil prices have doubled since last year, buoyed by mounting fears of supply bottlenecks due to robust economic expansion in Asia and continued supply disruptions in key oil producers such as Nigeria. A move which has already forced smaller Asian oil consumers such as Taiwan, Indonesia and Sri Lanka to raise domestic fuel prices. And now it was the turn of India to do so!