New Delhi: Government deferred a decision on a possible increase in fuel prices, sources said on Wednesday, putting off a move that would ease the government’s subsidy burden but add to inflation and voter discontent.
A ministerial panel had been scheduled to discuss a possible rise in diesel and cooking gas prices on Thursday.
The sources said a new date had not yet been fixed and gave no reasons for the cancellation. The ministers can reschedule the meeting at any time.
Indian oil firms earlier this month raised petrol prices -- already deregulated -- by 5.6%, but increasing diesel prices could have a broader inflationary impact as farmers and manufacturers pass their higher costs along to consumers.
Headline inflation is currently at 7.48%.
Oil companies in India can set petrol prices but prices of diesel and cooking fuels continue to be fixed by New Delhi.
Global crude prices have rallied, and oil steadied near a two-year high above $91 a barrel on Wednesday ahead of US inventory data.
The government of Prime Minister Manmohan Singh is fighting to keep a lid on prices and to keep doing business in the face of attacks over its record on corruption, which derailed the last session of Parliament.