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Taming Price-rise
Petrol, diesel cheaper
Inflation at 2-year high
Tribune News Service

New Delhi, February 15
In a desperate bid to stem the spurt in inflation, which has jumped to the highest in more than two years at 6.73 per cent, the Manmohan Singh Government today cut the prices of petrol and diesel by Rs 2 and Re 1 a litre, respectively. The reduction will come into effect at midnight tonight.

After the reduction, the retail selling price in Delhi for petrol will be Rs 42.85 per litre (as against Rs 44.85 now) and Rs 30.25 per litre for diesel (Rs 31.25 now), Petroleum Minister Murli Deora said.

The rising prices of petroleum products has a cascading effect on essential commodities and vegetables, which has shown an upward curve during the past few months, spurting inflation which now stands the highest in more than two years.

The reduction has come despite oil firms already losing Rs 1.35 a litre on diesel. After the reduction, the loss would widen to Rs 2.35 per litre. On petrol, the companies were making a profit of Rs 2 per litre, and the benefit has now been passed on to the consumer. Following today’s reduction and an identical cut announced on November 29, the government has completely rolled back the June 5, 2006, hike of Rs 4 on petrol and Rs 2 on diesel .

“The burden of this price reduction will be met partly by the revenue inflows and partly through oil bonds that have already been approved,” Mr Deora said.

Today’s move followed high-level talks Petroleum Minister

Murli Deora had over the past week with ruling UPA chairperson Sonia Gandhi and Prime Minister Manmohan Singh. Both were reportedly in favour of ensuring that since the global crude oil prices had stabilised, the common person should not be burdened any further, especially since inflation had also risen to new peaks.

In June, 2006, the Indian oil basket was at $67 per barrel, which jumped to $75 by August. But since then there has been a consistent dip in the Indian basket pricing, down to $52 per barrel in recent weeks.

Petrol Secretary M.S. Srinivasan said the burden of this price reduction would be partly met by revenues in terms of duty re-jig and partly through oil bonds already approved by the government.

In June, 2006, he had estimated that the under-recovery on sale of petrol, diesel, LPG and kerosene during 2006-07 would be Rs 73,500 crore. This was envisaged to be partly covered through oil bonds worth Rs 28,300 crore sanctioned at that time. However, with prices falling, the under-recovery would not exceed Rs 50,000 crore and “we will be able to meet the impact due to this reduction through oil bonds that have already been sanctioned.”

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PM’s assurance
Tribune News Service

New Delhi, February 15
Prime Minister Manmohan Singh today said his government has adopted a multi-pronged approach to control spiraling inflation. The reduction in the prices of petrol and diesel are part of that approach, Dr Singh told newspersons at a joint press conference with the visiting Italian Prime Minister Romano Prodi at Hyderabad House here.

Asked to react on National Security Adviser M.K. Narayanan’s statement on terrorists groups manipulating stock markets, he said, “I do not want to add to the turbulence by saying something… So, the question should be reserved for some other occasion.” However, he hastened to add that all precautionary measures were being taken to deal with it.

“All I can say is that we are taking all precautionary measures,” Dr Singh said. In a security conference in Munich, Mr Narayanan had said isolated incidents of terrorists manipulating stock markets to raise funds for their operations had been reported.

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