The Centre has raised the prices of diesel, cooking gas and kerosene marginally. In West Bengal, Chief Minister Mamata Banerjee has cushioned the price of cooking gas to just some extent. But the cost push inflation caused by the rise in diesel prices remains. Crude prices have been steadily rising globally and it may be said that the price rise is a belated move. The curb on duties on crude oil prices has not helped the oil companies in India significantly. No move has yet been made to decontrol the price of diesel which is the most used fuel. Nothing has come of the proposal that oil companies should revise retail prices on their own. The estimated under recoveries in oil, the difference between the cost price and realised price of petro goods would add up to Rs. 1,20,000 crore this fiscal alone. Sporadic price revisions cannot be welcome. There is need for effective reform in the oil sector. Plenty of scope exists for competitive, market-determined prices. The customs duty on crude has been reduced from 5% to nil and that on petrol and diesel is down from 7.5% to 2.5%. The state governments should bring down and rationalise local levies on oil products. Excise on diesel has been almost halved. But the special excise on petrol remains.
The main problem lies in the increased price of diesel. Apparently, the rise in the price of cooking gas and kerosene will hit the common man with the rising inflation. But the increase in the cost of diesel will be most oppressive as it will hike the cost of transportation of essential products to the market place. Costlier kerosene will add to the misery of poor villagers. Not only Left parties but also some allies in the UPA government have slammed the price hike. What is the solution? Maybe recourse to alternate sources of energy like solar power may alleviate the crisis somewhat.