Politics weighs heavy on fuel price hike

GoM meeting inconclusive as the Congress brass is not ready to face people's ire in a busy election year; decision likely on Monday.

Politics has overtaken the proposed hike in oil prices. Prime Minister Manmohan Singh, Finance Minister P Chidambaram and Foreign Minister Pranab Mukherjee (head of the group of ministers on oil prices) are the only three ministers in favour of a hike in petrol and diesel prices.

On the other hand, Congress chief Sonia Gandhi and other leaders in the party headquarters are against such a move. Important allies like Lalu Prasad's Rashtriya Janata Dal (RJD) and Karunanidhi's Dravida Munnetra Kazhagam (DMK) have also conveyed their displeasure over the proposed hike.

Even Petroleum Minister Murli Deora, at the last meeting of the GoM on Thursday, was happy keeping the prices at the current levels, according to sources. The feeling in the government is that the prices will go up, but minimally.

The GoM had before it the option of increaing the price of petrol by Rs 4 and of diesel by Rs 2 or increase the price of petrol by Rs 2 and diesel by Re 1. The petroleum ministry also wanted to hike the price of an LPG cylinder by Rs 10. However, due to pressure from the party, the meeting remained inconclusive. As the members had to discuss only the political objections (the economic part had been calculated), only the ministers were present at the meeting. This was perhaps the first GoM meeting in recent times where government officials were asked to wait outside.

The GoM is likely to meet again on Monday or Tuesday to take a final call. Although a hike has been indicated, the GoM will try to keep it as low as possible.

The Congress' objections are based on the fear of further losing popular support. The party feels that after the Gujarat and Himachal defeats, it is time for pro-people measures.

Gandhi has already asked her partymen to focus on programmes like Bharat Nirman to ensure some "visible pro-people results". If there is a fuel price hike at such a crucial time, the stock of the party will dip further. This year will see Assembly elections in nine states, including Rajasthan and Madhya Pradesh.

The prime minister, sources say, concerned about the long-term impact of burdening oil marketing companies with under-recoveries on sale of fuels at less than the cost price.

"Currently, he is more worried about oil prices than the Indo-US civil nuclear deal," said a senior Congress leader.