After a long time, the prices of diesel, which is largely used in the transport segment have been hiked on September 13, 2012. The prices have been raised to counter the threat of becoming the first big emerging economies to be downgraded to junk.
The long awaited decision has put an immense pressure on Prime Minister Manmohan Singh to plug one of the biggest drains in the treasury. The hike also saw an elation among the investors and also raised the expectations of more reforms to reverse an investment slump and revive sluggish economy.
However, the fuel price hike also led to instant political pressure. A protest march has also been announced at the weekend by a leading partner in the ling coalition. Earlier this year the petrol price hike had forced Manmohan Singh to partially rollback them.
Pawan Kumar Bansal the minister for parliamentary affairs said, “Nobody wants to put pressure on people but the subsidy bill had risen so high that this became inevitable”. Bansal added, “This is an essential step to revive the economy and the investors’ confidence.” The diesel prices were raised by Rs. 5 per litre on September 14, 2012. This led to a 14 percent rise in the price including taxes.
