Author: Biz India

BATHINDA (PUNJAB): Despite key Congress allies opposing deregulation of diesel prices, Prime Minister Manmohan Singh stressed on Saturday the need to ‘rationalize’ fuel prices as spiraling cost of international crude severely impacts India’s import bill. Inaugurating a nine-million ton a year refinery here, Singh said imports account for about 80% of India’s crude supplies and “we need to rationalize prices and at the same time ensure that the poor and needy are shielded from the effects of such rationalization.” Despite his caveat on protecting the vulnerable, Singh’s remarks point to likely increases in petrol and diesel prices if he does bite the bullet, despite the Nationalist Congress Party and the Trinamool Congress the “in principle” decision to deregulate diesel prices. The voluble allies have promised to protest the move with the  NCP planning rallies inDelhi and TMC chief Mamata Banerjee instructing party members of parliament (MPs) to voice the party’s opposition. Trinamool parliamentary party leader Sudip Bandhopadhyay has said the party will not support diesel price deregulation. Fuel subsidy accounted for 3.4% of government spending amounting to Rs 41,000 crore (US$7.8 billion) in 2010-11, and the forecast for international crude prices indicates costs will remain high. Under recoveries of oil companies amounted to Rs 138,406 crore (US$26.3 billion) in the financial year 2011-12. With the government straining to control the fiscal deficit, the pressure to increase fuel prices is...