Diesel price hiked by Rs 1.09 per litre after polling ends

The government, immediately after the conclusion of five week long elections has hiked the diesel prices by Rs 1.09 a litre, excluding state levies. With the hike coming into effect from Tuesday, diesel in Delhi will now cost Rs 56.71 (inclusive of tax); in Kolkata will cost Rs 61.38, a hike of Rs 1.27 from the previous Rs 60.11. While, in Mumbai, post the hike, diesel would be expensive by Rs 1.35 at Rs 65.21 compared to the previous Rs 63.86, and in Chennai will be up by Rs 1.32 at Rs 60.50 from the previous price of Rs 59.18.This development comes after a brief hiatus as the monthly hike in diesel prices were put on hold just before India began voting to elect a new government. State-owned oil companies had last hiked diesel price on March 1. Previously diesel prices had risen by a cumulative Rs 8.33 a litre in 14 installments since January 2013. This is part of government’s plans to raise diesel prices by 40-50 paise a litre every month until losses on the fuel are wiped out. However, oil firms forego the hikes due on April 1 and May 1 as UPA did not want to take unpopular decision during election season. The oil marketing companies  (OMCs)were asked to drop the plan of rate hike on hold on the argument that revenue losses on the fuel have dropped below Rs 6 a litre, which could be easily compensated by the government. Ironically, while the government is yet to accept the Parikh panel’s recommendations, the Oil Ministry had at the time of shelving the April hike claimed that an expert committee headed by Kirit Parikh recommended that government provide a fixed subsidy of Rs 6 per litre on diesel and hence was no need to raise rates, if the revenue losses were below this threshold limit. However, the rates hikes were delayed for yet another month even after losses surpassed the Rs 6 a litre threshold. Though, despite the hikes OMCs will continue losing Rs 5.71 on sale of diesel per litre.