Under the new regime, a gallon of petrol now costs US$3.20 in New Delhi and US$3.70 in Bombay. Diesel prices have shot up by 8% across the country and kerosene is the only fuel which has been spared the hike.

In a brief statement petroleum minister Mani Shankar Aiyar said, “The rise is aimed at bringing domestic retail oil prices in line with global prices that have shot up to record levels.”

While he did not elaborate further, Aiyar has long been pressing for a hike in response to the “huge losses” suffered by the state firms which have been selling petroleum products below cost.

Understandably, the decision has not been well received by the public and the opposition parties and has not been helped by the government’s decision not to cushion the hike by easing duties on imported petroleum products.