Terming the decision as "unjustified", BJP said it would have a cascading effect on various sectors resulting in all round price hikes.
"It will increase all transport costs for passengers as well as on goods. It will increase costs of irrigation, tractors and other agricultural inputs," BJP spokesman Prakash Javadekar said.
He also dubbed as "farce" the decision to raise the cap on subsidised LPG cylinders from six to nine.
"Government must withdraw its decision and enforce the earlier regime allowing any number of LPG cylinders for domestic use," Javadekar said.
CPI(M) General Secretary Prakash Karat said the steps towards deregulation of diesel prices will put additional burden on the common man.
"This will lead to continuous increase in the prices of diesel just as it happened with the prices of petrol after deregulation," he said.
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Karat said the rise in the prices of diesel will impact on transport and increase inflation and also affect farmers adversely.
"The UPA government is adamant about further burdening the people who are already suffering from ever increasing price rise of all essential commodities," he said.
Karat said the decision to raise the cap on LPG cylinders to nine was insufficient and provided little relief.
CPI National Secretary D Raja said, "The government's argument that this was done to face the fiscal deficit cannot be accepted as this deficit is due to its mismanagement of the economy. People cannot be punished for that."
Slamming the decision, Trinamool Congress leader Derek O'Brien said, "The Congress-led minority government is not managing the economy as much as damaging the economy."
He termed the hike in LPG subsidy as "all gas and gimmicks" and reiterated the party demand for 24 subsidised cooking gas cylinders per year.