As rupee dips, centre plots how to oil loot machine

They say crisis means opportunity. Well, in this case, the rupee’s crisis seems to have provided a golden opportunity to the Manmohan Singh government to increase the loot of the Indian aam aadmi.

On Saturday evening the Congress-led UPA government, which has become synonymous with indecision and delay, was surprisingly prompt in allowing petrol and diesel prices to be hiked steeply. The petrol price was increased by a steep Rs 2.35 per litre, the sixth increase in three months, and diesel by 50 paise per litre, the eighth since January, on the pretext of the falling rupee and firming international oil prices. As expected, the move was promptly hailed by large sections of the Indian corporate sector, bureaucracy, academia, policy fraternity, media and other sections who have become habituated to collaborating with the US and UK-led Western establishment.

The government is also reportedly preparing for harsher increases in petro-product rates after the Parliament session ends next month. Diesel prices may see a one-time hike of Rs 5 per litre, kerosene Rs 2 per litre and LPG of Rs 50 per cylinder. These proposed hikes are one-time and are outside the monthly revision in rates happening since January.

Following Saturday’s decision, petrol price in Delhi will go up by Rs 2.83 to Rs 74.10 per litre. It has gone up by Rs 11.1 per litre after including state tax since June 1. The diesel price in Delhi has been hiked by 57 paise to Rs 51.97 per litre.

The oil firms also raised the rates of non-subsidised domestic cooking gas (LPG) that households buy after exhausting their quota of nine subsidised or cheaper cylinders. The price in Delhi was hiked by Rs 57.50 per 14.2-kg cylinder to Rs 932.50.

Union petroleum and natural gas minister M Veerappa Moily, who had met Finance Minister P Chidambaram on Thursday, wrote a letter to Prime Minister Manmohan Singh on 30 August saying that without a price increase, the government would have to shell out a record Rs 97,500 crore to subsidise diesel and cooking fuel.

‘If the present position persists, the total under-recovery would reach Rs 180,000 crore in the current financial year compared to Rs 161,000 crore during 2012-13,’ Moily wrote to Singh.

However, a Rs 50 per cylinder increase in LPG rates would trim cooking gas losses by Rs 2,604 crore. Besides, a possible Rs 2 per litre hike in kerosene price would cut losses by Rs 1,014 crore. The price increases in the three items together would bring down government’s subsidy outgo to Rs 50,928 crore, he argued.