Aug. 22: Policy protagonists today brought to the fore the inevitability of the fuel price hike, saying the government had little choice but to let the bleeding oil companies charge buyers more for petrol, diesel and LPG.

The heat of the issue caught up with finance minister P. Chidambaram at Karaikudi in Tamil Nadu, where he hammered in the arguments for a petro-price hike to save oil companies from an anticipated Rs 40,000-crore haemorrhage at the end of this financial year.

“When the UPA government came to power more than a year ago, global crude prices were hovering around $28 per barrel. They have now shot up to $67. Though we are exploring other options, there is no alternative but to increase the prices of fuel. People will have to share part of the burden,” he said.

Planning Commission deputy chairman Montek Singh Ahluwalia warned fuel prices must go up to “maintain financial stability”. “It would be fiscally irresponsible not to align domestic prices with global rates, which are around $65,” he said on the sidelines of a conference in Delhi today.

“If we do not adjust fuel prices, we are running a hidden subsidy. The subsidy is having an extremely damaging effect on oil companies,” the plan panel top gun said.

Ahluwalia conceded that exceptions can be made for ‘target groups’, but with investors around the world looking at financial stability, the oil price hike is an imperative. “I do not think that subsidies of that scale can be put directly on the budget without other adverse consequences,” he said.