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India raised fuel prices in late June, a move expected to push up monthly price inflation by 0.9 percentage points. That's exacerbating headline inflation that stood at a surprisingly high 10.16 percent in May. Defending the government's decision, India's Minister of Petroleum and Natural Gas has ruled out any roll back.
Murli Deora, Minister, Ministry of Petroleum & Natural Gas, said, "35 rupees is the increase for LPG cylinders. We get one rupee per day. Is it fair for you to complain that we have made an increase? We have raised it by one rupee per day.
That would be 35 rupees per cylinder more, for kerosene, it is 12 rupees from 9 rupees. It is a very small increase. After increasing from 9 to 12, we are still losing so much money."
The minister also says the price rise was inevitable, as the government could no longer bear the losses incurred from fuel subsidies. The decision cuts subsidies on diesel, kerosene and cooking gas. The measure is intended to help rein in fiscal deficit, which is projected at 5.5 percent of the country's GDP.
The price hike will boost profits of state-run oil firms that have been losing revenue from government-set lower prices. But now the consumer will have to share the burden of the rising crude oil prices with the government.