Factors that restrain Centre from raising oil prices

NEW DELHI: Despite the global crude oil prices spurting to a record $135 a barrel this week and the Indian crude basket touching $125 a barrel, the lack of political consensus along with fear of inflation galloping out of control has prevented the Centre from hiking the prices of petrol and diesel.

With the inflation remaining static at 7.82 per cent this week, the government is concerned over its impact on the economic growth.

Although there has been tremendous pressure to hike the petrol prices, there is a fear within the government that it will not only have political repercussions but also create a negative inflationary impact on a cross section of the economy.

Official sources say the Finance Ministry as well as the Reserve Bank of India are of the view that if petrol prices are hiked at this juncture, it will add to the inflationary pressure and make things further difficult for the government.

“Not the right course”

“We are well aware of the crisis that has been created by the sharp increase in crude prices but then price hike is not the right course in the present scenario and things have to be worked out skilfully so as to not create any further impact on the economy,” a senior official said.

On the other hand, the Left parties have made it clear that they will not support the decision of the UPA government to hike petrol and diesel prices and will strongly oppose any such move. The Bharatiya Janata Party has also threatened to launch an agitation against such a move.

Building a case

However, an effort is on to build a case for a price hike within the ruling Congress, and Petroleum Minister Murli Deora is likely to meet UPA chairperson Sonia Gandhi shortly to apprise her of the situation on the oil front.