Murli Deora bats for fuel reforms, all opposes

Murli Deora bats for fuel reforms, all opposes

New Delhi: Oil minister said on Tuesday lifting fuel price controls would not hurt people, but a key government ally opposed the move, signalling potential delay in implementing the refom seen needed to improve public finances.

A ministerial panel deferred a decision on raising fuel prices on Monday, the second time in a year the government had tripped on pushing politically sensitive reform measures at a time when it was struggling to control high inflation.

Two powerful ministers from coalition parties stayed away from a ministerial panel meeting, signalling opposition to the move on fears of voter backlash ahead of local polls over the next year.

Oil minister Murli Deora said on Tuesday the government was now trying to find a date when all members of the panel could be present.

“Decontrol or market-driven prices will not hurt common man and will help the oil companies that are suffering losses (for selling fuel at cheaper rates)," Deora told Reuters.

But the Trinamool Congress, a key ally of the coalition, said it opposed any move to raise fuel prices, a move that can help reduce the fiscal deficit from the projected 5.5% of 2010-11 GDP and free up revenues for other programmes.

The Trinamool Congress, which provides the government vital parliamentary support, said any rise in fuel prices at a time the government was struggling to rein in inflation would only hurt the common man.

“As it is, people have been hit by food inflation this year. We will not allow one paisa increase in prices of kerosene and cooking gas anyway," Saugata Roy, Trinamool’s senior leader and a central minister, told Reuters.

“Fuel prices affect the people directly and the government must work out some other solution. Our party is completely against fuel price hike and our leader Mamata Banerjee has conveyed our concerns to Delhi."

Trinamool’s powerful leader, railway minister Mamata Banerjee, who faces elections in her stronghold state of West Bengal next year, skipped Monday’s meeting.

Though it was likely allies such as Trinamool could muddy the political waters with an eye on elections, there is little threat to the stability of the federal coalition in which these parties hold powerful ministries they will not want to give up.

But the Congress party-led government will be pinning its hopes on a good monsoon and lower international crude prices for inflation, which hovers near 10 percent, to moderate and avoid stoking public anger in a country where about 450 million live below $1.25 a day, analysts say.

Given that high prices are a politically sensitive issue affecting hundreds of millions of poor people, who form the bedrock of support for the Congress, the government is expected to gradually lift price controls on petrol, seen as rich man’s fuel, with smaller hikes in diesel and cooking gas prices.

The Congress has already been stung by voter backlash in municipal elections in the eastern state of West Bengal last week where it fared poorly.

“Mamata Banerjee is a factor today in Indian politics and the government cannot ignore her as she has clearly sent a message to the people that she is concerned about the people," said N. Bhaskara Rao of the Centre for Media Studies.

“The government might not rush on this issue now. They will first examine the implications on the railway economics, effect on the public distribution system and will ensure that cost of inflation is kept at a minimum before making any further move."