The Oil Marketing Companies (OMCs) last week had increased the price of petrol by over Rs 7.5 per litre in view of high crude oil prices and rupee depreciation. The decision evoked sharp reaction from several quarters, including allies of the ruling United Progressive Alliance. In this backdrop, the government has decided not to increase prices of diesel, kerosene and LPG (cooking gas) for now.
"We are not considering hike in prices of diesel, domestic LPG and kerosene. It is out of question right now," said Reddy after a meeting with Mukherjee in the morning. Reddy also said no dates have been fixed for the meeting of the Empowered Group of Ministers (EGoM) to take a view on freeing of diesel prices. Meanwhile, in view of the widespread protests over increase in price of petrol, Mukherjee is expected to write to state chiefs to consider cut in sales tax on petrol to partly neutralise the impact of price hike on consumers.
"We are awaiting inputs from the Petroleum Ministry. Finance Minister will be asking the state Chief Ministers to lower duties," an official said. India`s capital Delhi, northern Uttarakhand state and southern Kerala state have already announced cut in VAT on petrol. Earlier too, the Centre had asked the states to sacrifice a part of the revenue to reduce the burden of price hike on consumers. Several states then had responded to this call and reduced sales tax or Value Added Tax (VAT) on petrol. Industry body Assocham has also demanded that the Centre and states should cut taxes to reduce the burden on auto users.