A ‘wolf in sheep’s clothing’ is what the recent diesel price hike can be termed as. Though initially just up 51 paise, the repercussions are aplenty for the common man. Thursday, saw the Government of India move towards deregulation of diesel prices while at the same time it increased prices by 51 paise per liter with similar monthly price hikes.
This hike comes in with a decision to charge bulk consumers such as the defence, railways and state transport organisations a price which is Rs.10 per liter more than current prices. This will go a long way in saving approximately Rs.12, 907 crores in annual subsidy.
On the same note, the Government has succumbed to pressure and raised the cap on subsidized LPG to 9 cylinders per household from a current 6 which has made many heave a sigh of relief. Fuel subsidies are a major cause of concern as it puts additional pressure on the India budget which is running in deficit. Fuel consumption in India rose by 5% in the last fiscal and analysts surmise that any further price increase will adversely affect demand.