The cost for fuel consumption of Indians increased on Saturday after the government announced a hike in the price of some petroleum products, increasing inflationary pressures in the fast-growing economy.
Petroleum minister Jaipal Reddy late Friday raised the price of diesel by 3 rupees (7 cents) per litre, in a move that will pile added pressure on prime minister Manmohan Singh's embattled government.
The government also increased the price of kerosene by 2 rupees per litre, and of liquefied petroleum gas by 50 rupees per cylinder, in a bid to cut its fuel subsidies and help state-owned oil firms, which currently suffer big losses by selling fuel to consumers at prices far below market rates.
Finance minister Pranab Mukherjee told reporters late Friday that the increase was 'very modest,' according to the Press Trust of India.
The opposition criticised the price hike. The main opposition Bharatiya Janata Party said there would be a cascade effect likely leading to increased inflation.
Annual inflation spiralled to a higher-than-expected 9.06 per cent in May from 8.66 per cent the previous month, heaping misery on hundreds of millions of India's poor.
The increase in the cost of kerosene, which is seen as the 'poor man's fuel' could prove especially damaging for the ruling Congress Party, which counts the rural poor as a key electoral constituency.
Source : New Age
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