Cut in fuel prices bad news for UPA govt

Party forces hand as govt's opposition in the past weeks counts for little.

The announcement of a cut in petrol and diesel prices is being flagged as another incident of a disconnect between the Congress and the government by the UPA ministers, who have begun fearing for the stability of the government.

At a meeting of the UPA-Left coordination committee last week, Prime Minister Manmohan Singh had halted the Left in its tracks when it tried to raise the issue of a cut in fuel prices.

Congress President Sonia Gandhi was present when the prime minister emphasised that adjustment in petrol and diesel prices was best left to the government.

He urged the Left not to compare prices at peak levels but to look at the average. This, he said, had come down slightly in the case of petrol, but diesel and kerosene continued to hurt public sector petroleum companies owing to under-recoveries.

The prime minister said the market was so price-sensitive that "pressures" could come into play if there was a hint that this could be a matter of political negotiation.

That the UPA and Left discussed petrol prices was not mentioned in the statement issued after the meeting at the prime minister's insistence. The note prepared by Finance Minister P Chidambaram and circulated before the meeting said there would be "no discussion on cutting petrol prices."

Today, several ministers said they were "shocked" at Sonia Gandhi's demand for a downward revision, especially at a party forum.

They attribute the statement to pressure from a group of aspirants within the party who are trying to make a case before Gandhi that if diesel prices are not lowered, the party will face a drubbing in the UP and Punjab elections due early next year.

"This (the revision) is a loss of face for the prime minister. It is internal sabotage," a minister said.

Experienced Congressmen say this is only the subtext. They say the stage is being readied to pin the almost inevitable defeat of the Congress in the UP elections on the government's economic policies and a non-political prime minister. If this happens, a mid-term election will become unavoidable.

Congress ministers recalled the way in which economic reforms begun by the PV Narasimha Rao government in 1991 were trashed mid-way through its tenure because MPs said they did not make political sense. Manmohan Singh was the finance minister then.

Petroleum Minister Murli Deora gave the game away last night when he complimented Gandhi for her foresight in asking the government to reduce prices.

Although the consent of the Cabinet is no longer necessary to tweak petroleum prices within a certain price band, ministers say it would have been better if the government had waited 24 hours and taken the decision at the tomorrow's Cabinet meeting.

Meanwhile, the CPI(M), while welcoming the cut in prices, said only 50 per cent of the hike effected in June had been taken back as against their demand for a full rollback.

"If the fall in the crude oil price continues, the entire burden should be removed," CPI(M) Politburo member Sitaram Yechury said.

An "extremely happy" Congress, however, differed with the allies. "There is an old adage. Perfection is the enemy of good....We don't live in an ideal world. We support alleviation (of suffering) to common man in a limited context possible, and not unlimited," party spokesman Abhishek Manu Singhvi said.