Political pressure from within the United Progressive Alliance (UPA) over fuel price hike forced the Cabinet Committee on Political Affairs meeting, which was scheduled to be held later on Tuesday, to be postponed.
While the Finance and Petroleum ministries want an immediate hike, pointing out that future economic reforms won't be possible without lowering subsidies, UPA constituents like the Congress and the Trinamool Congress are against the prosed move.
Earlier, Oil Minister S Jaipal Reddy said that an increase in diesel, cooking gas and kerosene price was "unavoidable". Reddy said he had on Monday circulated an updated version of a note detailing the crisis created by rise in crude oil prices and fall in value of rupee against the US dollar to members of the CCPA, which is headed by Prime Minister Manmohan Singh.
"I have tried to acquaint the members of CCPA about this matter... As I have said before, painful and difficult decisions on price of oil products will have to be taken. Increase in price is unavoidable," he said.
He said a decision on raising prices would have to be taken not just on economic facts but also taking into account the how much the consumers can absorb. "We have to take a balanced view."
The Cabinet, which was awaiting UPA Chairperson Sonia Gandhi's return from her foreign trip, was likely to discuss the fuel prike hike in the meeting.
However, the Trinamool Congress indicated that the party would oppose any move to hike prices and the Congress, too, advised the Centre against raising kerosene prices.
Congress sources say that party weighed the fallout of the politically difficult decision as the economy was yet to gather steam. Sources add that Congress President Sonia Gandhi had given the go ahead but was worried about hiking the prices now.
The Opposition, too, was likely to target the government and oppose the price hike with the Bharatiya Janata Party (BJP) and the Left Front leading the charge.
The Oil Ministry had circulated a Cabinet note on fuel price hike. Finance minister P Chidambaram was reportedly pushing for a hike in fuel prices.
Oil companies have been pushing for a Rs 5 hike in petrol prices. They also want a hike in diesel, LPG and kerosene prices.
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