2012 Diesel Price Hike

Diesel Price Hiked by Rs 5 per litre

 

The Central Govt led by UPA on Thursday Sep 13,2012 hiked the price of diesel by Rs 5 per litre, to be effective from midnight. 

The government, however, spared an increase in petrol price by cutting excise duty of Rs 5.50 per litre.

Reactions to the decision of the Cabinet Committee of Political Affairs (CCPA) on Diesel Price Hike -

Trinamool Congress, a key UPA ally, said that the effect of the hike in the diesel price would trickle down to essential commodities. West Bengal Chief Minister Mamata Banerjee said she was shocked with the decision as her party was not consulted on the issue by the government.

UPA ally DMK has condemned the hike. Party supremo Karunanidhi said, "Already the prices of essential commodities are so high. This hike would further affect the poor and the middle class and increase inflation."

UPA ally NCP also demanded a rollback saying the decision will further burden the common man.

The Congress also said that as a party, it was not in favour of the hike. "As a party, we are not in a favour of the hike as it hurts the farmers," said Congress general secretary Digvijaya Singh.

Samajwadi Party, terming the hike in diesel price as an anti-people step by Congress-led UPA government,announced that it would hold a sit-in against the move across the state. 

BJP describing the hike in diesel prices as a cruel joke and "mortal blow" on the common man and farmers, accused the government of conspiring with petrol 'mafia' and said it will not allow the hike and take to the streets instead

BJP leader Ananth Kumar said, "It will have cascading effect on inflation, it will have direct effect on common man, farmers and labourers."

The Left Front also opposed the move by the government calling it a "highly condemnable action". CPM leader Brinda Karat said that at a time when food inflation was rising, the diesel price hike would have a cascading effect.

Karat said, "There is no question of waiting. The government has to roll back and reverse it entirely." 

 

Why a hike in diesel prices was necessary?

 

The hike in diesel prices was long overdue. Presently fuel subsidies account for 32 per cent% of the country's fiscal deficit with diesel being the main contributor. 

Last year the government spent over Rs 80,000 crore in subsidising diesel, kerosene, LPG and petrol. 

This year the government has already finished the Rs 43,000 crore it has allocated for subsidising fuel.

The oil marketing companies which have lost over Rs 1 lakh crore will bring down their losses by about Rs 20,000 crore in diesel. 

Petrol needed a hike of Rs 6 per litre but the government offset that by reducing excise duty by Rs 5.50 per litre from the existing rate of Rs 14.78 per litre.