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Govt says no plan to regulate petrol prices
Published on 10 Mar. 2011 12:45 AM IST
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The government has no plans now to intervene to set petrol prices, an oil ministry official said on Wednesday, as political unrest in Libya feeds fears of a rise in international oil prices. Petrol prices in India were freed up last year. But diesel, cooking gas and kerosene rates are set by the government, which partly compensates state oil firms for their losses when global crude oil prices increase, stated Reuters.
“There is no plan to regulate petrol prices now, but there is a provision that if prices go to astronomically high levels then the government may intervene,” said Sudhir Bhargava, additional secretary in the oil ministry.
Raising fuel prices is politically sensitive in India, with the government struggling to balance maintaining growth momentum and reining in inflation, among the highest of major Asian economies.
The ruling coalition faces crucial state elections over the next year which also make it unattractive to raise fuel prices. State oil firms are unlikely to raise fuel prices before key state elections starting in April, a government source said, as the ruling coalition tries to tackle voter anger over high inflation.
The country’s inflation eased less than expected in January to 8.23%, holding well above the Reserve Bank’s comfort zone and reinforcing expectations it will raise interest rates at its March policy review.
On March 1, state-run Indian Oil Corp said there was a need to raise petrol prices, a day after the budget failed to announce any measures to stem revenue losses of state oil firms.
The lack of support in the budget for oil firms had fed speculation that a ministerial panel on fuel pricing would take up the issue of hiking prices soon.
While the oil and finance ministries have appeared to support an increase in prices, a final decision is often a political one that takes into account its impact on the support bases of the ruling Congress party and its government allies.

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