Petrol prices have been hiked by Rs 7.50 per litre effective 12 am, May 24. Petroleum Minister, Jaipal Reddy had earlier in the day announced that an oil price hike was imperative as state run companies have incurred heavy losses to the tune of Rs 72,000 crore with the rupee land sliding to Rs 56 to a dollar
Petroleum min hints at oil price hikePetroleum Minister, S Jaipal Reddy today said that it is imperative to hike oil prices in India, as state-run companies incurred heavy losses due to the depreciation of the value of rupee against dollar.
Prime Minister's Economic Advisory Council Chairman C Rangarajan said, the Indian government needed to raise the petrol prices urgently in line with the high international crude oil prices to tackle fiscal deficit even at the cost of temporarily stoking inflation.
The state-run oil marketing companies had last raised petrol prices on November 4, but rolled it back almost within a fortnight of the hike.
High international crude oil prices, ruling mostly above $110 per barrel and a weak Indian currency have been straining oil marketing companies' finances, who have to import crude, thereby raising government's total subsidy support towards discounted retail fuel.
India aims to cap the fiscal deficit at 5.1% of the gross domestic product (GDP) in the current financial year 2012-13. It had overshot its target to limit the fiscal gap at 4.6% of GDP by a whopping 130 basis points in the last fiscal, as subsidy burden rose and revenue fell short of expectations.
The move is likely to trigger inflation once again.