The government today decided to hike diesel prices by Rs 5 per litre effective midnight tonight September 13, 2012. This is one of the biggest hikes that the price of diesel has seen in recent times given the hike is more than 10% of the price of diesel.
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 after this hike, it will cost Rs 46.95, after considering 12.5 per cent VAT on the hike.
But big relief for the Petrol and LPG car owners as the price remains untouched. Petrol needed a hike of Rs 6 per litre but the government offset that by reducing excise duty by Rs 5.50 per litre from existing rate of Rs 14.78 per litre.
What we say? Most of the commercial vehicles run on diesel. So if diesel prices raised the commodity prices too be raised. Thus causing the complete market to become expensive resulting in public revolt and strike (drum roll) etc… On the other hand, the diesel price hike is good for the economy given that the state owned oil companies have been bleeding heavily, with losses due to underpricing diesel amounting to over INR 1 lakh crores for 2012 alone.
Also see – Petrol prices increased by 70 paise