June 5 – India's government on Wednesday boosted fuel prices for the second time in a year to stem huge losses at state-run oil firms, stirring widespread political anger and worries about higher inflation.
Prime Minister Manmohan Singh defended the hike in a nationally televised address, saying Indian oil companies were under huge stress as a result of record high global oil prices, reported the AFP.
India, which imports 70 percent of its oil needs to feed its fast-growing economy, raised petrol prices by five rupees (12 cents) a litre and diesel by three rupees — or 11 and 9.4 percent respectively based on pump prices in the capital.
"Business cannot go on like this for ever. We need to learn to adjust to this new international scenario. We need to be efficient and economical in our use of energy," Prime Minister Manmohan Singh said in a 20 minute televised address to the nation while pointing out the global crude oil prices had topped $135 per barrel, against $67 per barrel when fuel prices were last raised in February.
"Our oil companies cannot go on incurring losses. This way, they will have no money to import crude oil from abroad," he said, adding: "Thus a rise in prices is inevitable."
The prime minister said despite the hike in prices of some petroleum products being permitted by his government, as much as 90 per cent of the fiscal burden had to be still borne by the government, reported the Economic Times.
India's left-leaning Congress government had been debating for weeks how to bail out state oil firms which sell fuel at hugely discounted, state-fixed rates to shield the poor from high fuel costs.
But it feared a voter backlash with national elections looming within a year and public anger already high over inflation, which is near a four-year peak of 8.1 percent, and food prices.