New Delhi, Sept. 5: Prime Minister Manmohan Singh today told the Left leadership that the government was left with no option but to increase petrol, diesel, cooking gas and kerosene prices as crude oil had touched $70 a barrel in the world market.
As a result, public sector oil companies are suffering losses at prices at which these products are being sold now.
Singh ruled out the cut in excise duties on petroleum products the Left had been asking for to cushion the impact of rising global prices.
CPI secretary A.B. Bardhan said the Prime Minister had turned down their suggestions to lower central excise and ask states, too, to scale down sales tax. His CPM counterpart, Prakash Karat, was also present at the meeting.
The Left decided to observe September 29, when they have called an all-India strike, as a day of protest against the price increase that would now be coming.
The question of revising petroleum prices is expected to be discussed at a cabinet meeting tomorrow when petroleum minister Mani Shankar Aiyar will be back from his foreign tour.
At the meeting, the Centre will have to find a way of arriving at a balance between the pressing need to raise prices and the danger of stoking inflation. Assembly polls in Bihar are also round the corner.
Petrol and diesel prices are expected to go up by Rs 2-3 a litre, cooking gas by Rs 20 a cylinder and kerosene by Re 1 a litre.
Bardhan told reporters that Singh did not indicate the extent of the possible price increase, but said it would be the “minimum possible”.
With the rate of inflation at just over 3 per cent, this is believed to be the propitious time to raise prices.
Singh told the Left leaders that oil companies were unable to pay dividends to the government. Their ability to pay income tax has been crippled as profits have plunged in the absence of a revision in prices in keeping with international rates. Excise duty, therefore, was the only source of earning for the government from oil and could not be reduced.
States, he told them, could not cut sales tax because their own revenues were in a shambles.
If the Left leaders were convinced by the argument, their public announcements did not signal acceptance.
Left parties and trade unions observe a strike on September 29 to highlight issues of food security, employment, women’s reservation in Parliament and state Assemblies and the forest rights bill. A protest against oil price increase has been tagged on to this.
At the meeting today, the Prime Minister asked the Left leaders about the strike.
“Without undertaking such measures (as excise duty cut), it will be unjustifiable to burden the consumers and make public sector companies suffer more losses,” the CPM said.
The oil companies have been asking for a Rs 5-7 a litre increase petrol and diesel prices. They are losing Rs 100 on each gas cylinder and Rs 12 on each litre of kerosene.