Oil Minister Jaipal Reddy on September 7, 2012 said that the government does not intend to raise the petrol, diesel, LPG and kerosene prices immediately. Reddy said that the price issue will be decided by the Cabinet.

The oil minister assured that the prices will be raised only after a political consensus and added, “Fuel price is a classic case of politics defeating economics”. Some of the senior oil ministry official said that the ministry has already informed the Cabinet about the precarious financial condition of the state oil firms and its impact on the public finances.

An official on the condition of anonymity said, “Price hike is inevitable to save oil companies”. Reddy also informed that during this financial year the revenue losses on selling fuels could even cross Rs. 2,00,000 crore this financial year.

The oil minister said, “We are of course facing crisis of unpredictable magnitude… We have to take some difficult and painful decisions”. The officials from the oil ministry said that it did not send any specific price hike for individual fuels to the cabinet. An official said, “We have given details of the prevailing financial situation and impact of unit price hike on individual products to total subsidy”. The finance ministry is also trying hard for a price hike so as to reduce the burden of the subsidy.

Photo Credits: India TV News