New Delhi: The Rs 3 hike in petrol that kicked in at midnight provoked political and public outrage today. An immediate consequence was that the government deferred indefinitely a meeting of ministers that was to consider making cooking gas more expensive for the average household.
The BJP threatened to organise protests in Delhi today. In Lucknow, members of the Samajwadi Party were lathi-charged as they tried to burn an effigy of the Prime Minister.
But for the government, the biggest concern was the anger expressed openly by its main allies, the DMK and Mamata Banerjee's Trinamool Congress (TMC). So it called off an Empowered Group of Ministers (EGoM) meeting this morning that was to debate whether households should be entitled to between 4-6 subsidised LPG cylinders every year, and pay market rates for refills after that. Subsidised cooking gas cylinders currently cost Rs 395.35 each; if the new proposal is passed, households would pay over Rs 650 per cylinder after exhausting their quota.
If the meeting chaired by Finance Minister Pranab Mukherjee had been held today, the DMK was planning to boycott it; the Trinamool Congress said it would've used the occasion to convey anger - both were unequivocal that a rise in LPG prices was not acceptable.
"It is not right that prices of petrol and other commodities are increasing with such frequency," said West Bengal Chief Minister Mamata Banerjee in Kolkata. With 19 MPs, Ms Banerjee is the second-biggest member of the UPA after the Congress.
In Chennai, the DMK was equally critical. Tamil Nadu's civic bodies polls are scheduled for next month. "LPG price hike will hit the common man," said DMK spokesperson TKS Elangovan. He also warned that the petrol price hike "will have a cascading effect."
Another key member of the UPA coalition, Sharad Pawar's Nationalist Congress Party (NCP), also turned on the government. Like the DMK, Mr Pawar's party said it was not consulted about the decision to increase the prices of petrol. Party leader DP Tripathi said, "We are very critical of the hike...we want a rollback." He added, "We wanted such issues discussed by the coordination committee of the UPA...we got to know about it from the media."
As the chorus of criticism swelled, Mr Mukherjee tried to explain that the petrol prices were raised by oil companies, not the government. "So far as petrol price is concerned, petrol has been deregulated. It is oil marketing companies' review," he said. The Congress also tried to distance itself from the controversial developments.
Spokesperson Rashid Alvi said his party "understands that the government should work around to give some respite to the common man." He also put the onus on state governments saying if they "tackle black marketing and hoarding, then prices will come down."
The BJP is not buying that argument. "The government is making excuses that with the increase in prices of dollars, the price of fuel prices got affected," said Shahnawaz Hussain, BJP BJP Spokesperson.
The three state-owned oil companies - Indian Oil Corporation, Hindustan Petroleum Corporation Limited and Bharat petroleum Corporation Limited - said yesterday that with the rupee tumbling against the dollar, they are paying more for crude oil.
"Oil retailers are losing Rs. 2.61 per litre or Rs. 15 crore per day on sale of petrol. Together with local taxes, the hike needed to level domestic rates with international prices is about Rs. 3 per litre," a top government official had said on Wednesday.
Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) have lost Rs. 2,450 crore this fiscal on selling petrol below the cost price. Besides petrol, the three firms are losing Rs. 263 crore per day on selling diesel, domestic LPG and kerosene below cost. Diesel is being sold at a subsidy of Rs. 6.05 a litre, kerosene at Rs. 23.25 per litre while domestic LPG rates are underpriced by Rs. 267 per 14.2-kg cylinder.