Thursday May 29, 12:04 PM
Cabinet to discuss fuel prices Thursday - source |
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NEW DELHI (Reuters) - The cabinet is expected to discuss raising retail fuel prices later on Thursday, a government source said, as it looks to stem mounting losses at state oil firms due to the surge in crude prices.
If it hikes prices, India would be the latest Asian nation to decide it can no longer shield consumers from crude's record run, following the likes of Taiwan, Sri Lanka and Indonesia
"What else can the cabinet discuss. There is nothing more important than this," a cabinet minister, who did not want to be named, told reporters.
The minister's comments reflect deepening anxiety within the Congress Party-led coalition that a hike in petrol and diesel prices could push inflation beyond current 3-½ year highs and upset poor consumers in a year dotted with elections.
Any hike is being strongly opposed by the government's communist allies, but the scale of the losses at state run oil refiners and retailers may force its hand. Oil ministry officials have described a rise in prices as "inevitable".
The cabinet is also likely to consider duty cuts on crude oil or issuing more bonds to state oil firms, which have to sell fuels at government-set, heavily discounted rates and are losing tens of millions of dollars a day.
Oil Minister Murli Deora is scheduled to meet Prime Minister Manmohan Singh before the cabinet session begins, the source said.
Oil prices, currently about $130 a barrel, have doubled since last year, but after earlier reductions Indian state oil firms are forced to sell fuels at prices lower than two years ago as the government is keen to tame inflation.
State-run firms, Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd, foresee difficulty in importing crude oil, which accounts for 70 percent of domestic consumption, if retail prices are not raised.
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