Faced with the task of capping its fuel subsidies and revive the health of OMCs, the government unexpectedly raised the diesel prices by a sharp Rs 5 per litre and also limited the number of subsidized cooking gas cylinder to six per household a year on Thursday evening, a move that within minutes prompted anger among political parties and common man who demanded immediate roll back and once more, the resignation of Prime minister.

The price hike, which was much needed to avoid an untimed sovereign credit rating cut, has been expected to rake in an additional Rs 20,300 crore to the oil companies which have been fuel-less amid high borrowing costs and rising under-recoveries.

Leaving the petrol and kerosene prices untouched, the government decided to raise the diesel prices, after a gap of more than one year, which was being sold at a loss of Rs 17 per litre and accounted for more than 53 per cent of the total subsidies.

For the first time, the government introduced a cap on supply of LPG cylinders of 14.2 kg that will make the consumers pay market price for cylinders beyond six.

However, the event didn’t go smoothly as usual, as UPA coalition allies like Trinamool Congress and Samajwadi Party were quick to criticize the move of the government and so did the opposition parties who termed it as a ‘cruel joke’.

West Bengal Chief Minister and Trinamool Congress chief Mamata Banerjee said, “We want rollback. I am shocked. The matter is very serious and sensitive; we can’t compromise with the people’s issue. We will discuss in our party meeting and our plan of action.”

“The decision is ill-timed and will hurt the common man,??? said Uttar Pradesh Chief Minister and Samajwadi Party leader Akhilesh Yadav.

C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said the government had taken the right decision, and that fiscal deficit had to be contained. He also said that an increase in diesel prices in India should help avert a credit rating downgrade for the country.