India's state-owned fuel firms on Saturday hiked petrol prices by nearly nine percent to help stem revenue losses from a rise crude prices, a record rise that will fuel stubbornly high inflation. The increase marked the eighth rise in petrol prices since India's government last June deregulated petrol prices in an economic reform aimed at reducing the massive subsidies it pays to state-run fuel companies.
The latest rise comes as the Congress-led government battles growing unpopularity over inflation running at close to nine percent and a slew of corruption scandals. The firms increased petrol price by around five rupees (six cents) a litre to 63.4 rupees per litre. Even after the hike, oil companies will continue to lose 5.50 rupees per litre and another price rise is expected, the Press Trust of India reported.
"The hike needed to make domestic rates at par with international prices was 10.50 rupees per litre but oil companies chose to hike rates by less than half of that," the news agency quoted an unnamed government official as saying. "Another hike in petrol prices is on cards soon," he said.
The move is expected to be followed by rises in diesel and domestic cooking gas prices later this month, the news agency said. The left-leaning government retained control of the prices of diesel, cooking gas and kerosene - known as the "poor man's fuel" - to protect the poor, who are the Congress party's core supporters, against price shocks. Even though the government freed petrol price from its control, oil companies continue to follow "informal" advice from the oil ministry on raising prices.
The increase in petrol prices came a day after the results of five state assembly elections were announced. State-run oil-marketing companies Indian Oil, Bharat Petroleum and Hindustan Petroleum had held off raising fuel prices in line with the surge in global crude prices ahead of the state elections.
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