NEW DELHI: Amid growing consumer concern, the Cabinet on Wednesday raised prices of petrol by Rs 5 and diesel by Rs 3 to bail out state-run oil firms that have been reeling under unprecedented high crude prices. Prices of domestic cooking gas was hiked by Rs 50 a cylinder effective midnight tonight.

The excise duty on petrol was cut by Rs 1 a litre and diesel and customs duty on crude was abolished. Poor man’s fuel kerosene was exempted from the hike.

Petroleum Minister Murli Deora told reporters. With the hikes, India joins other Asian nations like Indonesia and Malaysia that are raising regulated domestic fuel prices as they find they can no longer afford to shield their consumers from the full effect of record global prices.

The Cabinet Committee on Political Affairs today met to deliberate on the need of raising fuel prices in view of spurt in global oil prices.

Prime Minster Manmohan Singh was expected to address the nation later in the evening to tell the people why the government increased prices of fuel at this point when inflation is also high.

The meeting was chaired by Prime Minister Manmohan Singh and attended by External Affairs Minister Pranab Mukherjee, Defence Minister A K Antony, Finance Minister P Chidambaram, Petroleum Minister Murli Deora, Railway Minister Lalu Prasad and Road Transport Minister T R Baalu.

Petrol and diesel prices were last raised in February when the Indian basket of crude oil was at 67 dollars per barrel. Today it is at 124 dollars per barrel.

State-run Indian Oil, Bharat Petroleum and Hindustan Petroleum were together projected to lose Rs 2,46,600 crore on sale of petrol, diesel, domestic LPG and PDS kerosene in 2008-09 in absence of any price hike or duty cut.

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