May 28, 2012, 05.22 PM | Source: Reuters
The government has no immediate plans to raise the retail prices of diesel, kerosene and cooking gas, Oil Minister S. Jaipal Reddy said Monday.
Reddy's remarks do not rule out a price hike, however, and there were unconfirmed TV reports that a group of ministers could consider such a move on June 1 or 2.
"I am not touching (the prices of) diesel, LPG (liquefied petroleum gas) or kerosene," he said, adding that no date has yet been fixed for a meeting of a ministerial panel to review the prices of the three subsidised fuels.
Heavy subsidies on diesel, LPG and kerosene helped push India's fiscal deficit to 5.9 percent of GDP in the most recent fiscal year and investors and economists have long called for higher fuel prices to shore up government finances.
However, raising prices is politically fraught for a weakened Congress party-led government that faces opposition to fuel price increases from within its own ranks.
State-owned oil fuel retailers announced an 11 percent petrol price hike last week after a six-month freeze on rises, seeking to recover losses from higher global oil prices and a plunging rupee that have deepened the country's trade deficit.
That decision sparked two days of street protests and led the coalition government to open the way for a rollback of some of the increase.
Reddy said his ministry had recommended raising the factory gate tax on diesel-driven vehicles to curb growing consumption of the fuel, which is currently sold at substantially cheaper prices than petrol.
Shares in state oil companies Hindustan Petroleum Corp Ltd, Bharat Petroleum Corp Ltd and Oil and Natural Gas Corp extended their losses after Reddy's remarks.