It was looming right from the day the presidential elections got over. The diesel price hike, announced last night, was in the offing for a while, but what was not expected was the double whammy, of an unprecedented quota system for cooking gas. The Manmohan Singh government, which otherwise suffers from governance paralysis and keeps blaming allies for it, showed exceptional guts in going ahead with a move that will hurt aam aadmi. Predictable noises, from the opposition and allies alike, have started, with even the Congress itself joining in. Will there be a rollback, even partial? There are no indications yet.

PTI reports:

Biting the bullet, the government last night raised the diesel price by a steep Rs 5 per litre and capped the number of subsidised cooking gas cylinder to six per household a year, decisions that will rake in an additional Rs 20,300 crore to the oil companies.

The government, however, left untouched the price of petrol and kerosene.

Faced with the task of bringing down the ballooning oil subsidy, the governemnt for the first time introduced a cap on supply of LPG cylinders of 14.2 kg that will make the consumers pay market price for cylinders beyond six.

The tough decisions, which came under immediate attack from allies like Trinamool Congress and Samajwadi Party and opposition alike, were taken at a meeting of the Cabinet Committee on Political Affairs (CCPA) chaired by Prime Minister Manmohan Singh. It will come into effect from midnight.

The government, which has been facing criticism of policy paralysis, had last hiked the price of diesel by Rs 3 a litre in June last year.

The revised retail selling price of diesel in Delhi will be Rs 47 a litre, while branded diesel will be sold at the market rate.

For the remaining part of the current financial year, the number of subsidised LPG cylinder to a consumer will be three cylinders.

A government release said that any number of LPG cylinders will be available at the market rate over the capped number of six. While the price of subsidised cylinder will continue to be Rs 399 per cylinder in Delhi, the market rate will be notified by oil firms on monthly basis.

Out of the Rs 5 increase, Rs 1.50 is on account of increase in excise duty and the balance hike will reduce the under-recoveries of the Oil Marketing Companies (OMCs) by about Rs 15,000 crore in the remaining part of the current financial year.

But even after today's hike the under recoveries on account of diesel sale in the current year is estimated to be above Rs 1.03 lakh crore, the release said.

The capping of subsidised LPG cylinder to six in a year, it said, will help in reducing the under-recovery by about Rs 5,300 crore for the remaining part of the financial year.

However, it added that the under-recovery on sale of LPG during 2012-13, even after the cap, is estimated to be above Rs 32,000 crore.

The release further said that PDS kerosene, which is being sold at Rs 14.83 per litre (at Delhi), will result in under-recovery of Rs 32,000 crore in the current fiscal.

The Parliamentary Standing Committee on Petroleum & Natural Gas had earlier suggested capping of subsidised LPG cylinders to 6 per annum.

The capping supply of subsidised LPG cylinders at six per annum, it added, "will lead to saving of subsidy on one third of the total LPG cylinders. Two third of the total cylinders will still be supplied at subsidised rate".

About 44 per cent of the total LPG users, who consume six or less cylinders per annum, will not be affected by the government's decision. Capping of cylinders, it added, "will also lead to reduction in misuse/diversion of subsidised cylinders".

The decisions, the release added, will still leave an under-recovery of about Rs 1.67 lakh crore in the current fiscal, up from Rs 1.38 lakh crore in the previous fiscal.

We didn't favour such a hike in diesel price: Cong

Dubbing the Rs 5 per litre hike in diesel price as an "unpleasant" decision of the government, Congress last night said it was not in favour of an increase to such an extent because it hurts the farmers and the common man.

Party General Secretary Digvijay Singh said "we are not in favour of a hike in diesel prices to such an extent because it hurts the farmers and common man."

The government has to take a conscious decision after taking all allies of UPA into confidence, he said adding this should be discussed in the UPA Coordination Committee.

Asked whether it affects UPA's projection that it is the government of 'aam aadmi' (common man), Singh said UPA I and UPA II have taken "innumerable decisions benefitting the common man".

"At the same time, there are some unpleasant decisions that have to be taken by the government by taking an overall view of what is best for the country", Singh said.

Allies, Opposition slam diesel price hike

Slamming the government over diesel price hike, UP allies Trinamool Congress and Samajwadi Party have demanded an immediate rollback while the opposition said the increase will further hit the common man and create "mayhem" in the economy.

"We are unhappy. We will not accept it and demand its rollback," Mamata Banerjee, chief of Trinamool Congress, the second-largest constituent of the UPA said in Kolkata.

"If people do not mind, I will be most happy to withdraw support (to the UPA). If I withdraw support then other parties will provide support to them. And, then ask why we left the UPA which led to its collapse. People had misunderstood us when we had withdrawn support earlier."

The Trinamool Congress would take to the streets for 72 hours from Friday opposing the decisions, she said.

Demanding an immediate rollback in diesel prices, the Samajwadi Party, which provides outside support to the UPA, said, the decision is ill-timed.

"We demand immediate withdrawal of the hike as it will badly hit the common man and farmers," SP leader Kamal Farooqi said.

Their sharp reaction came after the government decided to hike diesel prices by Rs 5.62 per litre effective midnight tonight.

The Cabinet Committee on Political Affairs, headed by Prime Minister Manmohan Singh, this evening decided to raise diesel prices.

It also decided to restrict supply of subsidised cooking gas to six cylinders per household in a year.

The BJP termed the price hike as a cruel joke and "mortal blow" to the common man and farmers and charged the government with conspiring with petrol 'mafia'.

"This is a cruel joke on the common man in the country. It has hit farmers hard during the peak paddy sowing season. We will not allow this hike. We will not allow this government to loot the common man like this," BJP Vice President Mukhtar Abbas Naqvi said..

Admitting that it was an "unpleasant" decision of the Government, Congress said that it was not in favour of a hike in diesel prices to such an extent because it hurts the farmers and the common man.

"We are not in favour of a hike in diesel prices to such an extent because it hurts the farmers and common man," party general secretary Digvijay Singh said.

The government has to take a conscious decision after taking all allies of the United Progressive Alliance into confidence, he said adding that this should be discussed in the UPA Coordination Committee.

Asked whether it affects the UPA's projection that it is the government of the 'aam aadmi', Singh said that the UPA I and UPA II have taken innumerable decisions benefiting common man.

"At the same time, there are some unpleasant decisions that have to be taken by the Government by taking an overall view of what is best for the country," he said.

The Samajwadi Party, which is providing outside support to the UPA, protested against the price hike.

"This hike is too big and has come after Parliament session got over. We will ask for a rollback as this is going to badly hit common people and farmers. Some concessions have to be given to the people," party leader Kamal Farooqi said here.

Charging the Congress-led UPA government at the Centre with lacking economic ideas to tackle the fuel price hike and betraying the people, Tamil Nadu Chief Minister and All India Anna Dravida Munnettra Kazhagam (AIADMK) supremo Jayalalithaa also demanded immediate rollback of hike in diesel prices, besides the ceiling on supply of subsidised cylinders.

"Expressing my strong condemnation to this hike which will affect all sections of society. I demand the rollback of the hike in diesel price and ceiling in cylinder subsidy, if the UPA government is really concerned about the people," she said.

The Shiromani Akali Dal alleged that it was deliberate punishment meted out to the citizens for raising their voice against the Congress party.

Diesel price hike very high and unexpected: Karuna

Key UPA ally DMK today described the diesel price hike as 'very high' and unexpected and sought a roll back of the measure.

Party chief M Karunanidhi said the hike would further affect the poor and the salaried class who are already reeling under high prices of essential commodities.

He requested UPA Chairperson Sonia Gandhi to immediately convene the UPA coordination committee meeting to discuss the matter.

Karunanidhi demanded a rolllback on the restriction on the purchase of number of subsidised LPG cylinders per year. PTI SA APR

SP to hold sit-in to protest diesel price hike

Terming hike in diesel price as an anti-people step by Congress-led UPA government, Samajwadi Party today announced that it would hold a sit-in against the move across the state.

"The move to hike diesel price is anti-people and will increase prices. Samajwadi Party opposes the move and will hold sit-in across the state to protest the hike," SP spokesman Rajendra Chaudhary told PTI.

He said the party was of the view that price hike in diesel should by rolled back as it would adversely effect agriculture and farming community.

He said during the sit-in party workers would hold peaceful agitations to protest the hike.

Punjab CM demands rollback of diesel price hike

Punjab Chief Minister Parkash Singh Badal today criticised the Centre for the "unwarranted and steep" increase in price of diesel and demanded an immediate and complete withdrawal of this hike.

In a statement here, Badal said the hike of Rs 5 in price of diesel was absolutely "unrealistic and arbitrary."?

He said it was unforgivable that on the one hand the Centre claimed an abnormally high rate of growth in the country's economy, while on the other, it was burdening the common man with such undesirable rise in the prices of petroleum products.

He demanded immediate rollback of the hike.

Badal also flayed the move of Centre to restrict supply of domestic LPG cylinder to only six in a year.

UPA lacks economic ideas to tackle fuel price hike: Jaya

Charging the Congress-led UPA government at the Centre with lacking economic ideas to tackle the fuel price hike, Tamil Nadu Chief Minister Jayalalithaa today demanded immediate rollback of Rs five hike in diesel prices, besides the ceiling on supply of subsidised cylinders.

"The argument that increase in global crude prices and falling value of Indian Rupee against US Dollar are reasons for diesel price hike lacks substance. If concrete steps had been taken to control the falling value of the Rupee besides taking into account domestic crude output and the profit made by oil companies, this hike could have been avoided,"she said.

Not taking permanent action and blaming global crude prices and Rupee depreciation to increase fuel prices was not a proper economic measure. It would only further increase inflation, she said in an official statement.

Charging the UPA government with constantly betraying the people, she said the hike would have a cascading effect with immediate increase in fares of private transport, ultimately affecting all sections of society,including students,tourists, and passengers even as prices of essential commodities and vegetables could go up.

Further, the ceiling of six subsidies cylinders per year would be insufficient for a family, the Chief Minister said.

"Expressing my strong condemnation to this hike which will affect all sections of society, I demand the rollback of the hike in diesel price and ceiling in cylinder subsidy, if the UPA government is really concerned about the people,"she said.

Modi says it will hurt farmers most

Criticising the price hike, Gujarat chief minister Narendra Modi said it would affect farmers the most.

"There have been deficient rains in some states... by increasing diesel prices by Rs 5 per litre, the government has created more pain for those who are already suffering," Modi said addressing a poll rally at Valsad in south Gujarat.

"The diesel hike will have a cascading effect and prices of all essential things will go up. This price hike will prove to be very bad for the farmers of the state where there is drought-like situation," Modi said.

Targeting prime minister Manmohan Singh for the price hike, he said "The prime minister is sinking the ship of this country,".

Auto makers welcome diesel price hike

The automobile industry welcomed the diesel price hike, saying it is a much-awaited decision. Auto-makers, however, added that the hike has come at a wrong time for the overall economy.

"It is a good decision but the Rs 5 per litre hike will hurt the consumer and market. We have been saying that diesel prices should be corrected in a staggered manner," Society of Indian Automobile Manufacturers (SIAM) Senior Director Sugato Sen told PTI.

Mahindra & Mahindra Chief Executive (Automotive Division) Pravin Shah said: "This is a much-debated and much-awaited decision. For the auto industry, it is a welcome one as diesel needs to be priced at market value.

"However, for the overall economy it has come at a wrong time. The overall sentiment is weak and this will further add to inflation".

The Cabinet Committee on Political Affairs, headed by Prime Minister Manmohan Singh, this evening decided to raise diesel prices by Rs 5 per litre, excluding VAT (value-added tax).

Diesel in Delhi costs Rs 41.32 a litre and with this hike it will cost Rs 46.95, after considering 12.5 per cent VAT on the hike.

Sen said the hike in diesel price could encourage buyers, who have been deferring purchase, to come back to the market and demand of petrol vehicles could improve.

General Motors India Vice-President P Balendran said: "In the long term when the price difference between petrol and diesel fuels reduces, obviously sales of petrol vehicles will increase. However in the short-term, the diesel price hike will not have any impact on boosting sales as the market continuues to be subdued".

He also welcomed the step saying the auto industry has always been in favor of market-driven price for diesel.