Prime Minister Manmohan Singh, in an address to the nation on Wednesday, explained the circumstances under which the government effected the revision in the fuel prices. "I know that the price increases we have had to announce today will not be popular, though they are only modest,' he said while noting that the Centre was taking a revenue hit of Rs.22,660 crore during the 10 months of the current fiscal.

The increase effected by the Union Government in the prices of petrol, diesel and cooking gas on Wednesday came as a shock for the residents of Chandigarh and Panchkula and many of them rushed to the nearby petrol pumps to fill the tanks of their vehicles at the old rates as the new prices would be effective from midnight. Several prominent petrol pumps, especially the CITCO service station in Sector IX, saw serpentine queues. However, some pumps put up "Not Available' signboards and when customers quarrelled with the staff, they were curtly told that the supplies had run out.

After considerable hesitation, the government has announced a package of measures to cope with the heavy burden imposed by the high global oil prices. Its most visible component is the hike in the retail prices of petrol and diesel

The United Progressive Alliance (UPA) government on Wednesday announced a steep hike in fuel prices. It increased the price of petrol by Rs. 5, diesel by Rs. 3 and LPG by Rs. 50 a cylinder, but did not touch kerosene. Almost all Opposition parties, the Left and the UPA's allies criticised the government for the "anti-people' step and threatened to launch nationwide protests. The left parties called for a "powerful, nationwide protest movement' from Thursday till June 11.

The government is likely to announce a hike in fuel prices on Wednesday to bail out state-owned oil marketing companies (OMCs) that are suffering massive financial losses due to skyrocketing international crude prices. The decision will be first taken at a meeting of the Cabinet Committee on Political Affairs (CCPA) scheduled for the morning and later ratified by the Cabinet.

Under-recoveries by state-owned oil marketing companies are set to hit a new record in June with the under-realisation on the sale of diesel, the largest selling fuel and also the most politically sensitive, almost matching the subsidised selling price. At Rs 31.58 per litre, the under-realisation on diesel is a few paise short of the actual subsidised selling price of diesel in Delhi

In search of a "wider' consensus among political parties

AMITAV RANJAN Hike, Cuts & Bonds But Govt will push for Rs 3 & Rs 2 per litre for petrol and diesel, Rs 50 for LPG as it anticipates ally pressure. The government has, in principle, decided to increase prices of petrol by Rs 2 per litre, diesel by Re 1 per litre and cooking gas by Rs 20 per cylinder but will try and push for a higher raise at Saturday's Cabinet meeting.

A cess or surcharge on income tax and corporate tax may be levied to bail out oil firms reeling under high global prices as the Petroleum Ministry's proposal to raise petrol price by Rs. 10 a litre, diesel by Rs. 5 a litre and that of LPG by Rs. 50 a cylinder finds few takers. The new proposal follows Finance Minister P. Chidambaram's reluctance to cut duties on crude oil and petroleum products unless alternative source of revenues are identified.

Despite political setbacks for the Congress leaving little room for a hike in motor fuel prices, the Petroleum Ministry is toying with the proposal for a "massive hike in petrol' prices to bring them on a par with the market rates. Diesel, LPG and kerosene, however, will be left untouched. The deregulation of petrol could see its price jumping by Rs.15 to Rs.16 a litre.