The Tamil Nadu Chief Minister, J. Jayalalithaa, has urged the Prime Minister Manmohan Singh to do away with the hike in diesel prices for bulk consumers.

In a letter to the Prime Minister, a copy of which was released to the media, she said the Rs 11 hike on a litre of diesel for bulk consumers has driven up the cost of public transport. State Transport Undertakings in Tamil Nadu face an increased burden of over Rs 750 crore in their annual fuel bill.

The State Transport Undertakings are a vital need for the poor and it is not feasible to raise the bus fares to make up for the sudden increase in diesel price. Worldover public transportation is subsidised for public good. The Central Government has to share the burden of subsidy to provide affordable public transportation facilities to the poor. It is unfair that the super rich owners of luxury cars including high priced SUVs running on subsidised diesel pay Rs 10 less per litre than State Transport Undertakings that provide transport to the poor.

Following the recent deregulation of diesel prices, the fuel price has been increased by 55 paise per litre per month for retail consumers too.

The Chief Minister questioned the methodology of calculating underrecoveries of oil companies, “given the opacity of the pricing policies of the oil companies” and the profitability of the upstream oil companies. “I really wonder whether there is any justification for the partial decontrol of retail diesel prices and the huge increase in the price for bulk consumers. In normal marketing practice, it is the bulk consumers who enjoy discounts.”

(This article was published on January 25, 2013)
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