Diesel rises by record . 5, only 6 subsidized LPG cylinders/yr

Oil Cos To Give Mkt Rates For LPG Every Mnth

New Delhi: The government, reeling under the perception of policy paralysis, on Thursday finally grasped the nettle, hiking diesel price by a record Rs 5 a litre while capping the number of subsidized cooking gas cylinders at six a year. 
    Protests from parties, including UPA constituent Trinamool Congress, greeted the move. Trinamool chief Mamata Banerjee demanded a rollback even as transporters threatened to go on a strike. However, the decision to hike diesel price, the first in 15 months, clearly underlined the government's intent to repair its finances by reining in subsidies. 
    The twin decisions are likely to impact household budgets as the price of most food items will go up on account of higher transport cost. The cap on subsidized LPG will, however, leave a biggerhole in the wallet as there is a subsidy of around Rs 370 on a cylinder that's sold for Rs 399 in Delhi. 
    For a household that uses one cylinder a month, the LPG bill will go up by almost 50%. Currently, the family would be spending around Rs 4,800 a year on 12 subsidized cylinders. Now, it will pay Rs 2,400 a year for the six subsidized refills, and another Rs 4,600 for the six that will be delivered on payment of the market price. LPG cylinders will cost Rs 7,000 a year. 
    Under the present arrangement, oil companies will announce the market rate for cooking gas every month, although households are entitled to three subsidized cylinders over the remaining six months of the financial year that ends in March, 2013. 
    "Already, everything is so costly. It will be tough to manage the budget without compromising on savings," lamented a Delhi teacher. 
'Shocked' Didi, DMK and oppn demand rollback 
New Delhi: The government's decision to raise diesel price and limit subsidized LPG cylinders came under a fusillade of fire from both allies and the opposition, who unanimously demanded a rollback. 
    Trinamool Congress chief Mamata Banerjee also faulted the government for not consulting allies on such a "serious and sensitive" decision. "We are unhappy. We will not accept it and demand its rollback. We are astonished that in spite of the formation of the UPA coordination committee, such a decision was taken without consulting us. Withdraw the decision on diesel price hike and it (government) will have to continue to give subsidy on LPG cylinders and people will buy it at the same rate as earlier," she said. 
    The DMK too asked UPA chief Sonia Gandhi to convene a coordination committee meeting. In Chennai, M Karunanidhi said, "This unexpected steep hike in diesel price will have a cascading effect. Already, the prices of essential commodities are so high. This would further affect the poor. The subsidy cap on six LPG cylinders per year should be cancelled." TNNP18 Move marks a bold stab at policy paralysis perception 
    The government, however, believes the increase was unavoidable and said that despite the steps announced after a CCPA meeting, underrecoveries will come down by Rs 20,300 crore and oil marketing companies would still be grappling with losses of Rs 1.67 lakh crore in the current financial year. Despite Banerjee's demand for a rollback and her colleague Mukul Roy's grouse of not being consulted, government officials indicated that there was no going back on the decision. 
    Taken together with the raft of measures under consideration — allowing FDI in different sectors, including muti-brand retail and plan to rake in Rs 12,431 crore by selling stake in three PSU — the price hike marks a bold stab at the ever thickening perception of decision-making being in a limbo, and a desire to make the most of the twomonth window before the crucial assembly polls. 
    They are expected to eliminate the risk of more negative marks from rating agencies and rev up the markets which should in any case be buoyant on Monday because of the easing of monetary policy in the US. The expected cut in interest rates, likely on Monday, can only add to the positive surround sound. 
    The government, however, took care to cover its political flanks, stressing that the cap on subsidized gas cylinders follows a recommendation made by the parliamentary standing committee headed by Congress MP V Arun Kumar. To blunt the argument that the hike would hit the common man hard, it emphasized that around 44% of the households consumed six or fewer cylinders a year. 
    Transporters are expected to raise truck rentals by 7-8% and will take a call on calling a nation-wide strike on Monday. "We are holding a meeting, where we will decide the date for the strike since we cannot bear the burden," said Bal Malkit Singh, president of All-India Motor Transport Congress.