Oil minister Jaipal Reddy has sought to quash talk of an immediate partial rollback of the steep petrol price hike effected on Wednesday, saying there are no instant solutions and seeking a few days to watch global trends and discuss the matter with states before coming up with a view.
The few days, he promises, "will be only a few days and not weeks or in infinity." He explained the massive hike of Rs. 6.28 plus taxes as being necessitated by a double disaster - devaluation of rupee and increase in international prices of crude oil. He despite rising prices globally, oil marketing companies had been unable to raise prices and had lost crores of rupees. In the last two months alone, Mr Reddy said, the companies had lost Rs 2,300 crore only on petrol and were not compensated by the government.
The minister admitted that his government was under pressure from all political parties, including his own, the Congress, to withdraw the hike and appealed that "all parties in the country should work together and need to sacrifice for long-term good." He skirted questions on whether regulated oil products like diesel, LPG and kerosene would be raised.
In a short while from now, a core group of the Congress will meet to discuss the price hike and what Mr Jaipal Reddy calls the politics of it. People are out on the streets raising slogans against the UPA and burning effigies and the government has on its hands a clutch of calls for bandhs on May 31. The BJP-led NDA and the Left parties have called all-India bandhs, the Samajwadi Party has called a UP bandh on the same day, so has the BJD.
In Kolkata, West Bengal chief minister and Trinamool Congress chief Mamata Banerjee will take her protest to the streets, marching from her Assembly constituency Jadavpur to Hazra in south Kolkata tomorrow evening. Her close aide and Railway Minister Mukul Roy led a Trinamool Congress protest in the city yesterday.
The demand for a rollback has come even from within the Congress, which leads the UPA government at the Centre. Sources say that Opposition parties and allies apart, leaders of the Congress too have said they did not know about the price rise.
Congress-ruled states like Uttarakhand and Kerala have, reportedly under party instructions, cut value added tax on petrol to ease the burden on the people. Delhi Chief Minister Sheila Dikshit too hinted at such a move soon.
Sources say the hike could well have been structured with a margin for rollback built in to counter the demand of allies and the expected public anger. In November last, petrol prices were raised by Rs. 1.80, but the hike was withdrawn after much political pressure, including from the Congress.
The government has repeatedly pointed out that petrol is deregulated and so subject to market prices. And that state-owned oil companies and not the government, raise prices.
State-owned oil companies explained the steep hike as imperative given the losses that they have been incurring. They said they had waited for a moment when the price hike could be lower and also said prices, dictated by market considerations, could also fall soon.
India deregulated petrol prices in June 2010 but continues to subsidise kerosene, petrol and cooking gas to protect the poor from the impact of any inflation pressures. In the second half of 2011, oil companies began reflecting market realities more closely and raised petrol prices but were stopped from end-November on the request of the government - their majority shareholder - ahead of elections in some states. Petrol prices were last revised on December 1.
State-run oil companies have been losing Rs. 8000 crores per annum because they were being forced to sell petrol at subsidised rates.