Arati R. Jerath 

NEW DELHI: The imminent fuel price hike did not happen on Thursday with the government postponing a scheduled cabinet meeting and opting for prior consultations with UPA top honcho Sonia Gandhi instead to avoid a repetition of the 2006 embarrassment.

The government was forced into a humiliating partial rollback that year after Gandhi and the Congress party objected to the announced quantum of hike in petrol and diesel prices.

This time, Prime Minister Manmohan Singh is moving cautiously. He convened a late evening meeting at his residence, after deferring the cabinet meet, to apprise Gandhi of the options open to the government and get a green signal from her before going ahead. Those present at the meeting were mum on what transpired but a top government source expressed the hope that the matter would be settled “within two or three days’’.

There was speculation that the cabinet may meet on Saturday, May 31, to take a final view.

Once again, it’s the quantum of hike that is under discussion. Congress circles acknowledged that a fuel price hike is inevitable (despite the Left’s stringent opposition) but the party wants it to be the minimum possible so that prices are not affected. Spooked by the Karnataka loss, Congress leaders believe that inflation is the main cause of its declining “winnability’’ quotient.

The petroleum ministry is believed to have proposed a hike of Rs10 per litre in petrol prices and Rs5 per litre for diesel. It has also mooted a suggestion to eliminate customs duty on oil, slash import duty to 2.5 per cent, and reduce excise duty by 50 per cent. This is in keeping with the duty restructuring suggested by the Left parties as an alternative to an inflationary measure such as a price hike.

Ultimately, the government may settle for half-measures in deference to the Congress party’s concerns. One source suggested that petrol prices may be raised by Rs5 per litre and diesel by Rs3 per litre. The government may also consider a minor rejig in excise duty but retain the other taxes. Another proposal on the table is to float oil bonds to mop up resources to stem the bloodletting in the oil  companies.

The government’s dithering even as oil companies talked of rationing petrol spread mild panic in the Capital with an SMS flash warning people to “tank up NOW’’. 

Source : DNA