New
Delhi: The government raised retail petrol and diesel prices by about
seven per cent on Monday, the first increase since November 2004. The
raise comes on the back of China and other Asian nations raising fuel prices
in recent months. India kept postponing the decision for weeks, largely due
to opposition from the ruling coalition's Left front and other allies. Petroleum
minister Mani Shankar Aiyar said after a cabinet meeting that the increase
would bring prices more in line with soaring crude prices and stem the losses
of state-run oil firms. "We
have increased petrol prices by Rs2.50 and diesel by Rs2.00. The oil firms'
profit must be adequate to meet their investment in the hydocarbon sector,"
Aiyar told reporters. India
imports 70 per cent of its crude and retailers and refiners have been forced
to keep their prices at the same level for seven months, even though crude
prices have gained about 35 per cent since early January. Analysts
said the move would have a limited impact on inflation and demand. The
price of kerosene and cooking gas, which are heavily subsidised
and sold below the cost of production, have not risen. Oil prices soared to
a record above $59 a barrel on Monday.
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