Published On:Friday, May 25, 2012
Posted by devil
Government resists petrol price rollback, for now
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NEW DELHI (Reuters) - The government will wait a few days before reviewing a steep petrol price increase, Oil Minister S. Jaipal Reddy said on Friday, resisting protests and pressure from coalition allies to roll back the unpopular move welcomed by investors.
Reddy said the government would review prices "within days, not months", after observing the impact of the 11 percent price rise that led protesters to burn effigies of Prime Minister Manmohan Singh in rallies across the country.
"This is politics, and not physics," Reddy told a televised news conference in which he suggested the government would stick to its guns unless it became politically untenable.
State oil companies announced on Wednesday they would raise the price of petrol by about 6.28 rupees a litre, excluding taxes, the first increase in six months as they sought to recover growing losses from higher global oil prices and a plunging rupee.
Economists cheered the price increase, saying it showed the embattled coalition, paralysed for months by infighting and indecision, was taking action to rein in ballooning trade and fiscal deficits. It also raised hopes the government would tackle diesel, kerosene and LPG prices.
In a sign of his support for the economic logic of the price increase, the minister said he had been pushing for a ministerial meeting on raising diesel and other fuel prices. He did not say when the meeting, due to have taken place on Friday, might now happen.
"Politics is the art of making the desirable feasible," he said.
Petrol is not subsidised by the government, but state refiners, which dominate the market, had kept prices on hold despite an increase in crude prices.
Diesel, kerosene and liquid petroleum gas, fuels used by the poor and in public transport, are heavily subsidised and make up a hefty portion of the ballooning fiscal deficit.
(Reporting By Nidhi Verma; Writing by Frank Jack Daniel; Editing by Robert Birsel)
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