As we reported earlier in the day, an empowered group of ministers met in the evening today, and decided to increase the price of diesel by Rs 3. The prices of LPG and kerosene were also hiked. The group of ministers, headed by Pranab Mukherjee sanctioned the price hike in New Delhi. LPG will be 50 rupees dearer, while kerosene will now cost Rs 2 more per liter. The hike in prices is exclusive of VAT.
This should come as a bad news to automobile manufacturers and car owners alike. The auto industry has already slowed down substantially owing to high prices of petrol, it seems like the diesel price hike with further affect it. Expect the prices of commodities to go up as the transportation costs will directly take a hit with the increased diesel prices.
In all probability, this is not the end of it, as the government still thinks that the prices need to be ‘rationalized’ to help the state owned oil companies.
As a further measure to give relief to oil companies, the government has removed customs duty for crude oil and all petroleum products. Also, excise duty on diesel has been reduced to Rs. 2 from Rs. 4.60 per litre. Apparently, this would lead to a loss of Rs. 49,000 crore for the government for this fiscal.
All we have to say to that is, the amount is still much less than the loss to the exchequer in the 2G case