Govt may be forced to hike fuel prices

EVERY DROP IS PRECIOUS

New Delhi: After dal-chawal, petrol, diesel and CNG may burn a bigger hole in your pocket as the government tries to strike a balance between keeping transport fuel prices in check without letting state-run oilmarketing companies slip into the red. 

    The picture will be clear only after the Kirit Parikh panel submits its report this week but the contours of the future course will be clear from the outcome of oil minister Murli Deora's meeting with finance minister Pranab Mukherjee on Tuesday. 
    "We are trying not to increase auto fuel prices... You know the government is very worried about the price rise (of daily consumables). If hypothetically, there was an increase in diesel of Rs 2 (per litre), then it will have a cascading effect on commodities," Deora said on Monday when S Sundareshan called on him after taking charge as petroleum secretary. 
    The clear inhibiting factor for the government is that the budget is approaching and it would not want to be seen to be adding to price rise ahead of the parliament session. Even earlier, Deora has stressed the economic logic but this time the political timing seems a little off. 
    On his part, he said the government could decide on raising price of natural gas under the Centre's control by 30% within "weeks". The ministry's proposal has been supported by finance ministry but was yet to get nod from fertiliser and power ministries. A hike in natural gas prices may also push up CNG prices and marginally impact the cost of electricity. 
    The minister's statement, however, indicates his political dilemma. The Parikh panel is largely expected to recommend deregulation of at least petrol prices and some freedom on diesel, probably within a price band. This is nothing new as two previous panels — under former RBI governor C Rangarajan and former cabinet secretary and Plan panel member B K Chaturvedi — too had suggested similar measures. But the oil ministry could not push through the measures for lack of political clearance, though there were votaries of pricing freedom within the government. The situation does not seem any different. Crude prices are ruling at moderate levels and state elections are some months away.