Diesel price hikes will continue: Moily
The government will not roll back its policy on reforms and state-run oil marketing companies (OMCs) will keep on hiking diesel price by 50 paise per litre per month, Petroleum Minister M Veerappa Moily declared on Friday.
Many analysts have been speculating that recent poll setbacks could force the Congress-led UPA government to roll back its policy on fuel price hikes to cut down subsidies.
But Mr. Moily sough to quell such speculations, saying, "We do not act on panic. If the country has to go forward, reform is a must. So the reforms will continue. We have to pay for diesel and petrol to the international market, otherwise they will not supply to us."
However, the minister dropped a hint that the government might take a softer stand on Kirit Parikh-led committee's recommendations that diesel prices should be increased immediately by Rs 5 per litre and LPG's price by Rs 250 per cylinder.
He also said that his ministry would ask state governments to decrease the value added tax (VAT) on petroleum products.
The monthly hikes in the rates of diesel help OMCs in offsetting their under-recoveries that they incur because of selling the fuel at lower than market rates. Despite several hikes over the past months, OMCs are still incurring a loss of around Rs 9.90 per litre on diesel.