Wednesday, 19 September 2012

Government might consider partial roll back of Diesel prices - Sources

 Government is considering a partial rollback of a hike in diesel prices announced last week as part of a slew of " big bang" economic reforms that have plunged Prime Minister Manmohan Singh's coalition into crisis.

A senior source in the ruling Congress party said the rollback was being considered, speaking after a meeting of the senior party leadership. Finance Minister P. Chidambaram, however, declined to comment when approached by reporters.

A hike in diesel prices and other reforms such as retail liberalisation prompted the government's biggest ally to withdraw from the coalition on Tuesday evening.

Government raised the price of heavily subsidised diesel by Rs 5 to rein in its fiscal deficit and counter the threat of becoming the first of the big emerging economies to be downgraded to junk.

Diesel is one of the main contributors to a subsidy bill that economists warn could push the country's fiscal deficit above a target of 5.1 percent of gross domestic product.

But the fuel price increase caused an instant political backlash.


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