Cannes: Unfazed by ally Trinamool Congress' threat of even withdrawing support, Prime Minister Manmohan Singh on Friday virtually justified the hike in petrol prices, saying there should be further movement towards deregulation of fuel prices.
Addressing a press conference after the G20 Summit here, he said the market should be allowed to follow its level.
"Well that is the general direction in which we should move. I think the move to decontrol the prices is a part of that process.
"But as I said, these are very sensitive areas and I have no hesitation in saying ultimately we must allow the markets to find their own level except for those commodities which are semi public goods," Singh said.
Mamata warns Govt
Back home, Mamata Banerjee led Trinamool Congress threatened to pullout of UPA if it does not rollback decision of petrol price hike introduced last night, but said that the final call will be made after Prime Minister's return.
In Kolkata, Banerjee said "If hike continues we will withdraw our support."
Other allies including National Conference demanded the withdrawal of petrol price hike.
Govt in control mode
While TMC along with other allies demanded the review of price hike, sources in the government said the rollback in the petrol prices could not be ruled out. Party leaders are waiting for the Prime Minister to return to the country on Saturday before they hold a meeting on the political ramifications of the hike and next steps.
Hike to affect inflation: Pranab
Meanwhile, Finance Minister Pranab Mukherjee defending the government said that the recent hike in the petrol prices will have some impact on inflation. "Nobody in the government knows... because petrol prices are increased by the petroleum companies, not by the government. Diesel, kerosene and gas are controlled items."
State-owned oil companies on Thursday affected yet another steep hike in petrol price, by Rs 1.80 per litre with effect, the 5th increase this year, coming on top of falling rupee and rising cost of imported crude.
Kerala waives surcharge
Meanwhile, giving some relief to the masses, Kerala government on Friday decided to waive surcharge on petrol prices. The state government’s decision would mean a Rs 37 paise relief on petrol per litre.
The state government's move has paved way for other states to take a decision in this direction.
IOC rules out rollback in hike
A day after raising petrol price by a steep Rs 1.80 a litre, the Indian Oil Corporation, the nation's largest fuel retailer on Friday ruled out a rollback in the hike, but said will cut rate if the government gives out a directive.
IOC also said the hike was unavoidable as rupee depreciation has increased crude imports costlier.
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