India hikes gasoline, diesel prices

Agence France Presse

New Delhi, June 20:

India’s federal cabinet raised gasoline and diesel prices by as much as seven per cent on Monday to offset higher international oil prices since the last hike in November 2004, a federal

minister said. “The cabinet today decided to increase the price of petrol by Rs 2.50 and diesel by Rs 2 effective from midnight,” information and broadcasting minister, Jaipal Reddy told reporters. The price of gasoline will rise 6.5 per cent to 40.49 rupees per litre in the capital New Delhi while diesel will cost 7.0 per cent more at 28.45 rupees. “These decisions were taken after wide consultations following a sharp rise in the price of crude oil at the global level,” Reddy said. The government however declined to raise the price of kerosene, a fuel used widely by poor households for cooking, Reddy said.

India imports more than 70 per cent of its oil needs with the import bill soaring 40 per cent for the year ended March to $27.20 billion. On Monday, oil prices rose further into record high territory to top $59 a barrel in early Asian trade before easing slightly. The government has avoided increasing oil prices since last year because of opposition from the communist allies it depends upon for crucial support. The communist parties on Monday threatened to hold a nationwide protest over the hike. Oil consumption in India has been steadily increasing in the rapidly-growing economy as industries have stepped up production and automobile ownership grows. The hike in oil prices could stoke inflation, which hit a 13-month low in June at 4.22 per cent , after soaring to a three-and-a-half year high above eight per cent in 2004.