EGOM meeting on fuel prices delayed

An expected announcement of a rise in diesel prices on Friday, has been put off following a delay in a government meeting to decide on the sensitive issue. This has raised questions as to whether or not officials were fully on board on the proposed move.

Oil prices were down 6 per cent yesterday with major consuming countries announcing an emergency release of stocks, which pushed benchmark Brent crude to a four-month low and provided scope to the government to raise prices causing less pain for consumers.

Since it was first elected in 2004, the government of prime minister Manmohan Singh has tried to soft pedal on tough reforms to keep its predominantly rural voter base happy. The government is now seen to be delaying a decision on increasing diesel and other fuel prices for months even in the face of mounting subsidy burden.

But persistently high inflation may be said to be among the lesser woes of the government, seen to be presiding over a series of corruption scandals that has led to a virtual paralysis at the highest levels of decision making.

''We are working on more options, the final decision will be announced after the meeting,'' Oil minister Jaipal Reddy told reporters, adding that the meeting had been rescheduled for 7.00 pm, a delay of 6 hours.

According to sources familiar with the matter a price rise was on the cards, but the government could also go in for options like cutting taxes.