Petroleum minister Jaipal Reddy late Friday raised the price of diesel by 3 rupees (7 cents) per litre, in a move that will pile added pressure on Prime Minister Manmohan Singh's embattled government.
The government also increased the price of kerosene by 2 rupees per litre, and of liquefied petroleum gas (LPG) by 50 rupees per cylinder, in a bid to cut its fuel subsidies and help state-owned oil firms, which currently suffer big losses by selling fuel to consumers at prices far below market rates.
Finance minister Pranab Mukherjee told reporters late Friday that the increase was "very modest," according to the Press Trust of India.
Mukherjee said the government had cut customs and excise duties on crude oil and petroleum products, giving up revenues of 490 billion rupees.
"I do hope the states will also reduce their VAT (value added tax) so that relief could be given to the consumer," he added.
The opposition criticised the price hike.
The main opposition Bharatiya Janat