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Reddy says no to diesel price hike for now

Reddy says no to diesel price hike for now
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First Published: Thu, Jan 20 2011. 05 18 PM IST
Updated: Thu, Jan 20 2011. 05 18 PM IST
New Delhi: India is not currently looking at an increase in diesel prices, newly-appointed petroleum minister S Jaipal Reddy said on Thursday, continuing the delay in deregulation as the government focuses on taming inflation.
“There is no proposal on the anvil for increasing prices of diesel,” said Reddy, who was shifted from the urban development ministry as part of Prime Minister Manmohan Singh’s low-key Cabinet reshuffle on Wednesday.
The government intended to raise diesel prices in December after approving the move in principle in June, but delayed implementation because it feared voter anger at a time when inflation was rising sharply.
Latest figures show India’s fuel inflation was 11.53% in the year to 8 January, at the same pace as a week earlier, while food inflation eased for the second straight week, tracking lower fruit and vegetable prices.
But in December, headline inflation accelerated and that is likely to put pressure on the Reserve bank of India (RBI) to raise rates at a policy review next week.
Reddy said the government would continue its policy of petrol price decontrol and seek a cut in crude oil and products taxes -- something the ministry is lobbying for with finance colleagues.
A key coalition ally for the government, Trinamool Congress, expressed concern over petrol prices earlier this week and said it wanted to be consulted over increases.
Petrol has risen sharply since deregulation in June as international crude prices climb. The government reserves the right to intervene if price increases are considered too steep.
Reddy, seen as less close to industry than his predecessor Murli Deora who had a reputation with the business community for getting things done, stressed continuity after the portfolio change.
“I am a new minister of old government ... so whatever decision taken by Murli Deora was taken by us,” Reddy said.
The ministry is also lobbying for a roll back in the 5% import tax on crude oil and a reduction in excise duty on oil products.
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First Published: Thu, Jan 20 2011. 05 18 PM IST
More Topics: Diesel | Fuel Inflation | Petrol | S Jaipal Reddy | Oil |