Govt may raise diesel prices once finance bill approved

[Son of Govinda]

Govt to raise diesel prices once finance bill approved - source | Reuters

(Reuters) - India will raise retail prices of subsidised fuels, including diesel, once parliament approves the finance bill for the current fiscal year early next month, a senior government source with knowledge of the matter said on Thursday.

Parliament is expected to consider the finance bill on May 7 and approve it a couple of days after that.

"The government's credibility on fiscal consolidation is at stake. After crude prices remaining over $120 a barrel, hike in oil (fuel) prices is certain," the source, who did not wish to be named because of the sensitivity of the issue, told Reuters.

"We cannot do without it. Once the finance bill is approved, oil prices including diesel would be raised," he said.

Finance Minister Pranab Mukherjee has vowed to raise fuel prices as soon as possible to tackle a rising subsidy burden and large deficits, but the move is politically fraught for the weak coalition government, already under fire over high inflation.

Diesel prices were last raised in July and the government has still not fulfilled a promise to fully liberalize the market. It was expected to raise prices earlier this year.

India imports about 80 percent of its crude oil needs. Rising global prices increases its import bill and widens the trade and current account deficits.

In theory, India allows state fuel retailers to fix petrol prices to market rates but continues to cap prices of other fuels at a lower rate to rein in inflation and protect the poor.

However, the state fuel retailers - Indian Oil Corp (IOC.NS), Bharat Petroleum Corp (BPCL.NS) and Hindustan Petroleum Corp (HPCL.NS) - have not raised prices of petrol since December in line with global trends due to an unofficial dictat from the government.

Any price rise will help curb rampant diesel use, which has increased as the market-driven price of alternatives like fuel oil have jumped. Diesel now accounts for a third of local fuel use.

The source indicated gasoline prices could be raised around the same time as diesel.

Softening inflation, currently at about 7 percent, also strengthens a case for a hike in fuel prices.

The government will not reverse a hike in gold import duty to 4 percent from earlier 2 percent, introduced in March, the source said, adding it may abolish an excise duty levied on non-branded jewellery.

Jewellery traders across the country went on strike last month protesting against the duties. The industry called off the strike after it said the finance minister promised to reconsider.

 

[The Messiah]

Bastards have already raised price of petrol by 20 in the last 2 years

 

[nitesh]

one more step closer

Govt agrees in-principle to free diesel prices, no such proposal for LPG - The Times of India

 

[ejazr]

About time, although I guess LPG would be deregulated as well once the UID project is complete and the cash transfer scheme is in place for BPL households.

 

[nitesh]

Ejaz, it is high time they go away with subsidizing every petro product, but alas this seems not happening

 

[thakur_ritesh]

It'll be a very tough call if ever taken, and with the way the politics of our country is moulded I dont expect much on this front. A good editorial in tribune:

Tough to decontrol diesel

THOUGH the government took an in-principle decision to decontrol diesel prices in June 2010, it has not gathered enough courage to let market forces dictate oil prices in India. It set no deadline when the issue cropped up in the Rajya Sabha on Tuesday. Petrol prices were freed from government control then, but its prices have not moved in tandem with the global trend. Experts are almost unanimous in pleading for aligning domestic oil prices with those at the global level. The 2010 decision was based on the report of an expert committee headed by Kirit S. Parikh.

There are valid economic reasons for oil price decontrol. India's 80 per cent oil needs are met by imports. The spike in the global prices last year unsettled government finances. Last fiscal the government paid Rs 65,000 crore to compensate the state-run oil marketing companies for selling petroleum products below cost. This year the budget set only Rs 43,580 crore for the oil subsidy and the Finance Minister hoped the oil prices would be suitably raised to cut the subsidy bill. If the government dithers on a hike, its fiscal deficit would further worsen. Already foreign investors are concerned about the Union finances. The latest blow comes from rating agency Standard and Poor's downgrading India's financial outlook from "stable" to "negative".

If the government goes in for market-determined diesel prices, there would be trouble of another kind. Since the economy runs on diesel, a price hike would make almost everything — from transportation to essential commodities — more expensive. Inflation would climb up, forcing the RBI to shelve rate cut plans. Costlier diesel would ignite public anger and political parties would raise the banner of revolt on behalf of the "aam aadmi". The already beleaguered UPA government would find it hard to handle the political storm. Its own ally, the "pro-people" Trinamool Congress, would, once again, threaten to withdraw support. Weakened by the recent electoral setbacks, the Congress leadership may not be able to muster courage to take the unpleasant step, no matter how desirable.

 

[Predator]

slow kill in progress

raise prices so high common man cant afford food

when food riots break out use the police to murder the common man

if that fails to curb the violence then introduce new laws to outlaw anti-govt protests

even if that fails bring in army to impose order

after all the globalists have made their intentions clear, they want a new world order but only want 500,000,000 humans to live, rest must die one way or the other

 

[lcatejas]

Any how if they raise the diesel price .. it will only effect SUV owner who are enjoying Diesel subsidy ...Normal people only ready effected ..

 

[rock127]

Any how if they raise the diesel price .. it will only effect SUV owner who are enjoying Diesel subsidy ...Normal people only ready effected ..

It would be the common man who would suffer because diesel would increase the transportation cost of trucks/buses etc which carries all the products.

 

[Predator]

Any how if they raise the diesel price .. it will only effect SUV owner who are enjoying Diesel subsidy ...Normal people only ready effected ..

no, from rich to poor everyone will be affected
every vegetable transported from farms to mandi and then to local shop is transported using diesel run lorries, meaning all sabzis will cost more

packetwalla milk is transported from co-operative societies to your house from diesel run milk tankers, milk cost will rise too

mobile call rates will be increased since mobile towers use diesel run generators for backup power

STC's will increase prices of bus tickets since most buses are diesel run

each and every item which uses diesel in its supply chain will cost more

 

[Predator]

and not to forgot all the babus working for govt will demand a hike in dearness allowance too

 

[maomao]

In the event of diesel price increase - I foresee heavy food inflation in Urban Areas! be prepared to shell out huge dole of cash, for the politically connected middlemen!

 

[Blackwater]

Time for HYBRID CARS. GOVT should relax duty on hybrid cars.

Indian janta also need to be educate on importance of hybrid technology

Toyota pirus

Honda Hybrid

 

[Predator]

^ many cant afford hybrid cars even after duty cuts and its unwise to depend on govt which wants to make our life hell

better get prepared by stocking food supplies before the price rises

 

[Blackwater]

^ many cant afford hybrid cars even after duty cuts and its unwise to depend on govt which wants to make our life hell

better get prepared by stocking food supplies before the price rises

you r wrong. if average middle class Indian can buy cars range from 5 to 10 lakhs, they can easily buy hybrid cars. even in small cars toyota has introduced this hybrid tech.

provided

govt relax sales and other tax on hybrid cars.

companies should promote hybrid tech

it will also help to curb carbon emission

also it will help to minimize dependency on petro products


Yes electric cars are not possible in India, not at least another 20 yrs




In europe govt promotes to buy hybrid cars by giving subsidy of 5000 euros and no road tax. in Europe you have to pay road tax every month average tax is around 60 to 100 euros per month

I pay 110 euros for my Audi A 4, 2.0 TDI

 

[Vishwarupa]

Instead of raising Diesel price government should think of increasing(double) road taxes on Cars & SUVs which run on Diesel. By raising diesel price common man will be effected.

Slash all types of taxes on diesel run luxury cars/Suv.

 

[Blackwater]

Instead of raising Diesel price government should think of increasing(double) road taxes on Cars & SUVs which run on Diesel. By raising diesel price common man will be effected.

Slash all types of taxes on diesel run luxury cars/Suv.

you r contradicting your own statement here:taunt1:

 

[Vishwarupa]

No Sir,

I am not i am saying Government should increase road tax on Cars & suv which run on diesel.