Cannes: Unfazed by ally Trinamool Congress' threat of even withdrawing support, Prime Minister Manmohan Singh on Friday virtually justified the hike in petrol prices, saying there should be further movement towards deregulation of fuel prices. Congress goes defensive on petrol price With UPA allies crying foul over petrol price hike, the Congress on Friday indicated that there might be a "partial rollback" of the hike in the next few days and urged the government to provide "healing touch" to common man. Will roll back price hike if Centre gives directive: Oil cos
Addressing a press conference after the G-20 Summit here, he said the market should be allowed to follow its level. "Well that is the general direction in which we should move. I think the move to decontrol the prices is a part of that process.
"But as I said, these are very sensitive areas and I have no hesitation in saying ultimately we must allow the markets to find their own level except for those commodities which are semi public goods," Singh said.
He was replying to a question about the all-round opposition back home to on Thursday's decision of oil companies to hike the petrol price by Rs 1.80 per litre and TC led by Mamata Banerjee even talking in terms of withdrawing support to the UPA government.
"So, the direction of change is clear. We must move in the direction of decontrolling more prices," the Prime Minister said.
The Prime Minister's comments assume significance in the context of stiff opposition to the hike in petrol prices under the deregulated system.
The prices of diesel, LPG and kerosene are still administered by the government and are not deregulated yet.
Replying to a question on inflation, Singh said food inflation is a problem. While the food grains prices are relatively stable, the problem was with the secondary and tertiary food items like vegetables, egg and fish.
This, he said, was a reflection of demand exceeding supply and was also a sign of increasing prosperity.
Singh said while analysing food inflation the increase in the net income by 8 per cent per annum and the population increase by 1.6 percent should not be lost sight of.
"Congress party is very concerned about the price rise and calls upon the government to take measures, and hopes the government will look into the matter very seriously," party spokesperson Abhishek Singhvi told reporters here.
He said the party believes that the government will not only take efforts to control the price rise but also consider other ways and means to give relief to people, adding such a "healing touch" and urgent measures are required.
A senior party leader, speaking on the condition of anonymity, made it clear that the partial rollback of petrol price will probably happen once Prime Minister Manmohan Singh returns from abroad on Saturday.
The leader also said the consultations with other UPA allies on this issue will also take place after Singh's arrival.
At the AICC briefing, Singhvi, however, refused to go into the specifics of the measures that are likely to be taken in this regard.
"I am not going into the specifics. We are not here to fetter the jurisdiction and work of the government. Whichever means has the desired effect will be highly desirable. But we leave it to the discretion of the government to decide these steps," he said.
The Congress spokesperson also found nothing wrong in Trinamool Congress supremo Mamata Banerjee's assertion over the issue.
"I read her and other allies' comments as sensitive concerns and certainly not as anything divisive," he said.
Shingvi also assured that "every element of the coalition will be heard with understanding, seriousness and compassion".
His reactions came after Trinamool Congress, the largest ally of UPA, strongly protested the unilateral petrol price hike today and threatened to pull out of the ruling coalition.
"Our withdrawal of support may result in fall of the government. But since the Prime Minister is away, we want to discuss with him and have sought an appointment with him," Banerjee told reporters in Kolkata.
"Discussions are required before a vital decision is to be taken," she said after her party's parliamentary wing submitted a resolution to her calling to quit the UPA.
Facing all-round criticism for a steep hike of Rs 1.80 a litre in petrol price, state-owned oil companies on Friday said they will roll back the increase in rate if the government gives a directive to that effect.
At a hurriedly called press conference, Indian Oil Corporation (IOC) Chairman R S Butola said the government had freed petrol prices in June last year and empowered oil companies to decide the retail rates, but given the ownership structure the PSUs we will abide by the government directive to roll back prices.
"We do not plan to affect a roll-back of prices, but if we get a directive (to roll-back prices), we will have to implement that," Butola, who was accompanied by BPCL Chairman
R K Singh, said.
Explaining the reasons for hike in petrol prices, Butola said the oil marketing companies had lost Rs 2,468 crore on selling the fuel below cost in the first half of the current fiscal. This was on top of Rs 2,500 crore losses they incurred in 2010-11.
"Given the magnitude of the losses, the choice before us was to either cut down production or pass on the increase to consumers. We chose to raise prices and continue supply lines," he said. "The average price of Indian basket of crude oil, which was USD 85.09 per barrel in 2010-11, has now increased by 30 per cent and the average price in the current financial year is around USD 110 a barrel," the statement said.
To worsen the situation, Rupee has depreciated from Rs 45 to a US dollar to over Rs 49 per dollar in the recent months.
"The under-recoveries (revenue loss) of oil marketing companies increase by about Rs 8,000 crore annually on account of every Re 1 depreciation," it said.
In spite of the increase in retail selling price of diesel, domestic LPG and kerosene in June as well as reduction in customs and excise duties, the oil firms are incurring huge losses.
"The total under-recovery of oil PSUs on sale of three products for the year is expected to be around Rs 132,000 crore compared to Rs 78,190 crore last year," it said.
The three firms have lost Rs 64,900 crore in the first half of the fiscal ended September 30.
Despite a cash support of Rs 15,000 crore by the government and a contribution of Rs 21,633 crore by the upstream oil companies, the oil marketing companies have declared huge losses for the first half of 2011-12.
"The combined losses of BPCL and HPCL for the first half are more than Rs 12,000 crore and IOC is also likely to be in the red, if no further cash assistance is announced," the statement said.
"The crisis faced by oil companies is evident by unprecedented level of borrowings of Rs 129,989 crore necessitated by need for working capital and dollar requirements for payment of funds for import of crude," it added.
Cannes: Unfazed by ally Trinamool Congress' threat of even withdrawing support, Prime Minister Manmohan Singh on Friday virtually justified the hike in petrol prices, saying there should be further movement towards deregulation of fuel prices.
Congress goes defensive on petrol price
With UPA allies crying foul over petrol price hike, the Congress on Friday indicated that there might be a "partial rollback" of the hike in the next few days and urged the government to provide "healing touch" to common man.
Will roll back price hike if Centre gives directive: Oil cos