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2012 September Diesel Price Hike and FDI reforms

The Indian Government has announced a Rs. 5 per litre hike in diesel price, subsidization of LPG and announced FDI in retail and civil aviation in September 2012. The opposition parties have demanded a roll back in the hike and reforms. Several political parties have staged protests against the government's decision across the country.

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Hike in Diesel prices

The UPA Government has hiked the price of diesel by Rs. 5 per litre on September 13, 2012. There was also a limit on the subsidized LPG cylinders. The hike is condemned by almost all the opposition parties and there were protests demanding the roll back of the diesel price.


Industry sources say that the hike in diesel price would force the food prices to go up.


Samajwadi Party leaders and party workers staged protests across Uttar Pradesh protesting the hike in diesel price and subsidizing of LPG. SP spokesman Rajendra Chowdhury said that the protests were held in all districts of UP on the directive of state unit president and chief minister Akhilesh Yadav.

Ambika Soni - Minister for Information and Broadcasting Ambika Soni defended the hike in prices of diesel and LPG saying that the government has to take some tough decisions for the grown of the country. She said that the Sensex and the industry has welcomed the hike saying that it is in the right direction.

Sushma Swaraj - Leader of Opposition in BJP, Sushma Swaraj, lashed out against the government saying that the common man has to pay for the loot of the Government.

Oommen Chandy - Kerala Chief Minister Oommen Chandy said that the government should atleast reduce the hike.

Lalu Prasad Yadav - Rashtriya Janata Dal chief Lalu Prasad Yadav said that this is not the right time to increase the price. The party is against it and will fight for the rollback in hike.

Check on LPG Black Marketing

Bharat Petroleum, the Second largest oil marketer in India, has said that cap on LPG will curb black marketing. BPCL chairman and managing director, RK Singh, on 23 September 2012, said, "I think it is a brilliant move. Black marketing takes place primarily due to the big difference in domestic and commercial LPG. By restricting the supply to six cylinders per family per year, there will not be enough cylinders available in the system for diversion,"

Congress to offer 9 subsidized cylinders in Congress-ruled states

AICC General Secretary Janardhan Dwivedi on September 19, said that that Congress-ruled states will increase supply of subsidized cylinders from 6 to 9 household annually.

On 22 September 2012, the Manipur and Arunachal Pradesh governments have decided to raise the cap on LPG subsidized cylindesr to nine.

FDI in Aviation and Multi-Brand Retail

The government headed by UPA has announced on September 14, 2012 that it would allow FDI in aviation and multi-brand retail. The government defended its decision to revive the sluggish economy allowing 51% foreign investment in multi-brand retail. The Cabinet Committee on Economic Affairs (CCEA) would also allow divestment of five state-owned companies including a 10% divestment in Oil India. Decision to divest in Nalco (12.5%) and Hindustan Copper (9.59%) were also made.

Prime Minister Manmohan Singh said at the CCEA meeting that the time had come for big reforms. He said, "If we have to go down, we have to go down fighting,"

Trinamool Congress has given a 72-hour notice to the government to roll back FDI in multi-brand retail and fuel price hike.


Congress ally in UPA Trinamool Congress criticize the decision and asked the government to review its decision.

  • TMC spokesperson Kunal Ghosh said, "We strongly oppose the move. we demand that the government should review this decision or we will protest."
  • Railways Minister and TMC MP Mukul Roy said, "We are opposed to FDI in retail. We will discuss on the future course of action."
  • CPM leader Gurudas Dasgupta said, "This will not stimulate the economy, instead it will have adverse affect on small traders. Politically, the government is going down. The government under Prime Minister Manmohan Singh is responsible to the decline in the economy," he said.
  • FICCI general secretary Rajiv Kumar said, "This is a big step. We welcome this move," adding, "We hope the Opposition will not target the move as it is good for the economy."

Protests against Hike in Diesel Price and FDI in mutli-brand retail and civil aviation

The Left and Right parties have joined in their protests against government's decisions on the hike in the diesel price, subsidizing LPG and allowing FDI in retail-brand and aviation. The opposition BJP and Left parties are planning to stage nationwide protests. Regional parties like Samajwadi Party and Janata Dal (United) also staged protests. CPM leader Prakash Karat spoke to Samajwadi Party chief Mulayam Singh Yadav. After the meeting, Karat said "We will soon build a nation-wide coalition against the government's decisions. The date for a nation-wide bandh will be announced soon."

Despite the outrage on the reforms by several political parties in India, the Government is firm on its decision and said that there is no going back.

Stand on FDI of various states

Samajwadi Party not to allow FDI in UP

The Samajwadi Party has said that its government will now allow the implementation of FDI in retail sector in the state. Speaking to reporters in Lucknow on September 15, 2012 Uttar Pradesh Chief Minister and state president Akhilesh Yadav said that the decision of continuing support to UPA government after hike in diesel price and FDI rests with the party's national leadership. "Only the National President will decide how the support will continue. It has been asked several times but Samajwadi Party will always provide support to counter communal powers in the country," he said.

Bihar to oppose FDI in retail sector

Bihar Chief Minister Nitish Kumar has said that his government will not allow FDI in retail sector in Bihar. Speaking to reporters at his official residence, Nitish Kumar said that his government will oppose tooth and nail. He said that the FDI in retail would subjugate the farmers and destroy local retailers.

Andhra Pradesh welcomes FDI

Andhra Pradesh Chief Minister N Kiran Kumar Reddy welcomed the FDI in multi-brand retail. On September 17, 2012 he said that FDI would help both consumers and farmers. Lack of proper facilities for processing and storage was letting aqua products, vegetable and grains to rot, he said. The state government has already communicated its consent to the Centre.

MNS welcomes FDI in multi-brand retail

MNS chief Raj Thackeray said that he would welcome FDI in multi-brand retail, if the outfits employ Maharashtrians.

BJP alleges diversion from scams

Bharatiya Janata Party said that the government has taken decision to approve Foreign Direct Investment (FDI) in multi-brand retain and civil aviation to create a diversion from the charges of corruption in the coal blocks allocation issue. Speaking at a press conference in New Delhi, BJP spokesperson Ravi Shankar Prasad said that the timing of the decision shows that the government is aimed at diverting the attention of people from the scams. Senior BJP leader LK Advani also posted a message on his blog alleging diversion from scams.

Trinamool Congress gives ultimatum

Trinamool Congress

Trinamool Congress party has given a 72-hour ultimatum to the government to roll back the hike in diesel prices. TMC Chief Mamata Banerjee called a party meeting on September 18, 2012 to decide whether to back out of the UPA alliance. The party is also contemplating recalling its ministers from the government and to support it from outside.

Related: Trinamool Congress withdraws support from UPA 2

NDA calls for Bharat Bandh on September 20

Almost all of the opposition political parties in India are staging protests nation wide on September 20, 2012 protesting the diesel price hike and FDI in multi-retail brand.

Main Article: September 20 Bharat Bandh and Protests

Chidambaram rules out rollback

Finance Minister P Chidambaram has ruled out any rollback in the diesel price hike, cap on subsidized LPG and FDI in retail. Indicating that there are more reforms to come, Chidambaram said that there is no threat to the government from its allies or outside. He further said that the Department of Revenue, Disinvestment and SEBI would decide on steps to revitalize the economy by October 30.

Third Front

Even as the Congress is making attempts to ensure that Samajwadi Party will support the United Progressive Alliance (UPA), Mulayam Singh Yadav gave a stern warning on September 20, 2012 demanding the government to roll back the recent diesel price hike and FDI decisions. Mulayam Singh Yadav said that his party will be forced to think of an alternative if the government doesn’t roll back the recent decisions.

CPI(M) leader Sitaram Yecury called on the non-Congress and non-BJP parties to join together to form an alternative to the present government. Left leader Prakash Karat also welcomed Samjawadi Party saying that Mulayam could be an important leader in the third front.

Government notifies FDI

Despite the uproar from the opposition on Government's decision to allow FDI in multi-brand retail, the government formally notified it on September 20, 2012. The Prime Minister addressed the nation on September 21, 2012.

The opposition parties were not impressed by the Prime Minister's speech. The BJP, Left, JD(U) and Trinamool Congress hit out at the Prime Minister saying he misled the nation. BJP leader Mukhtar Abbas Naqvi said, "In his speech, the PM tried to mislead the country. He appeared advocating the interests of foreign countries and not the Indians he leads." JD(U) leader Shivanand Tiwari said, "Everybody knows a major share of petrol and diesel is imported. But what steps has the government taken to bring down the consumption. He is accusing the opposition of creating confusion on the issue but, in fact, Singh himself is doing so." CPM chief Prakash Karat said. "The PM has sought to defend the indefensible steps taken by the government. He has not answered how he could proceed with these measures when it does not have the support of the overwhelming majority in Parliament,"

Advertisements to create Awareness

The UPA government has sanctioned Rs. 100 crore for advertisements in an attempt to create awareness among people about the economic reforms. The advertisements will be in electronic and print media. The government reportedly has created two sets of advertisements, one each for rural and urban areas. Advertisements targeted people living in cities would focus on FDI in retail and the reason behind hiking of diesel prices. For those in rural areas, the government is targeting ads to apprise them of development programmes initiated by the UPA government.

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