NEW DELHI (Commodity Online): In a historical move, the Indian government has today freed the retail petroleum prices in the country. The prices, which had been administered by the government so as to provide fuel at a concessional rate to the users, will now by linked to the market price of the crude oil in the international market.

The decision, which means that fluctuations in international prices would directly reflect in the domestic market, was taken in a meeting of the empowered group of ministers (EGOM), headed by the Indian Finance Minister, Pranab Mukherjee in New Delhi today.

The price hike will be done in a phased manner. India’s Oil Secretary will meet the leaders of the public sector oil companies to discuss the frequency of the hike.

As of now, the government has approved the increase in the price of petrol, diesel and LPG. Petrol price is now up by Rs 3.50 a litre, diesel by Rs 2 and LPG by Rs 35 per cylinder.

The EGoM meeting was held to review freeing up of petrol prices and cutting subsidies on diesel, kerosene and cooking gas that is believed to help the ailing fiscal situation of the Indian economy with projected fiscal deficit of over 5% of GDP for 2010-11.

Prior to the meet, S Sunderesan, the oil secretary had said that the under recoveries on the part of oil marketing companies for petrol would have been Rs.7,000 crore and for diesel Rs.23,000 crore for the whole year if their prices would not have been decontrolled.

According to him, for an average car user the increase in petrol price would add a burden of only Rs.150 per month while for a motorcycle user the burden would be Rs.30-35 per month.

Meanwhile, there is also a hike in domestic fuels like kerosene and LPG. The prices of kerosene, which had been untouched since 2002, have been raised by Rs.3 a litre, while the cost of an LPG cylinder would go up by Rs.35 per cylinder. The government currently gives a subsidy of Rs.262 per cylinder.

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook