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Government hikes diesel price, allies unhappy

The government announced a hike in diesel price by Rs 5 a litre on Thursday and restricted availability of cooking gas cylinders per family to six per year. The decisions come into effect from midnight on Thursday.

Reacting to the hike, the Trinamool Congress supremo Mamata Banerjee said that she would have been very happy if she could have withdrawn support from the UPA regime rather than be party to such 'anti-people' policy. She also announced that her party would hit the streets against the anti-people decision, and threatened it wouldn't 'take her a minute to withdraw support' if the hike was not reversed.

The Prime Minister Manmohan Singh-headed Cabinet Committee on Political Affairs (CCPA) took the decisions here. The panel, comprising ministers from allies of the United Progressive Alliance (UPA), was expected to meet on Tuesday evening, but the meeting was postponed.

The steep hike in diesel prices is expected to affect a wide range of transportation, ranging from locomotives to heavy-duty trucks. The proponents in government of raising diesel prices have pointed out that a large chunk of high-priced automobiles in the country also run on diesel, thereby resulting in a subsidy for the rich.

Diesel and cooking-gas prices have not been revised since June 2011.

Citing rising global crude oil prices and devaluation of rupee, the oil minister S Jaipal Reddy had said on Wednesday that a hike in diesel, LPG and kerosene prices was unavoidable. 'However painful and difficult the increase in price of oil product may be, increase is unavoidable,' Reddy had said.

According to Reddy, the impact of rising crude oil prices and fall in the rupee value would mean that state-owned oil firms would end the fiscal with a huge Rs 1,88,000 crore revenue loss on selling fuel below cost.

The oil-marketing companies claim that they have been selling diesel at a loss of Rs 19.26 per litre, kerosene at a loss of Rs 34.34 per litre and domestic LPG at a loss of Rs 347 per 14.2 kilogramme cylinder.
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