Union Budget 2013-14 of India Highlights Live Rail pdf Income Tax Latest News Images Photos New

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Budget 2013: No tax slab revision, new taxes on super rich; SUVs, mobiles costly

The government unveiled new taxes on the rich and large companies on Thursday to fund higher-than-expected spending for the next fiscal year, in a budget that aimed to revive growth amid the country's worst slowdown in a decade ahead of a 2014 election. 

Stocks, bond prices and therupee all fell despite finance minister P Chidambaram's vow to cut next year's fiscal deficit to 4.8% of GDP, which some watchers said counted on ambitious revenue assumptions given hefty spending targets.

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There had been widespread expectation, fuelled in part by comments by finance ministry officials, that Chidambaram would present an austere budget in line with the spending cuts he forced on government ministries in recent months.

But the spending plan appeared to have been drawn up with a looming general election in mind, some economists said.

"With a general election not much than a year away, political pressure from within the Congress Party may well have had an influence on the make-up of the Finance Minister's budget," Credit Suisse said.

Union Budget 2013-14 of India Highlights 

Chidambaram, a three-time finance minister seen as a candidate for prime minister in 2014, has staked his reputation on cutting swollen fiscal and current account deficits that have alarmed credit rating agencies and triggered warnings that India's sovereign bonds could be downgraded to 'junk' status. There was no immediate comment from the agencies.

"Fiscal consolidation cannot be effective only by cutting expenditure," Chidambaram said in his speech, seen as a balancing act to stave off a credit rating downgrade while meeting demands for populist spending heading into an election year.

Hefty revenue growth assumptions

Total budget expenditure will rise by an unexpectedly high 16% in the 2013/14 fiscal year that begins on April 1 to 16.65 trillion rupees.

Next year's fiscal deficit target is in line with expectations but assumes hefty revenue growth, including 558 billion rupees from the sale of government stakes in companies, or more than double the 240 billion rupee target for the current year, which falls short of the initial target.

"From a macro perspective, the budget is disappointing in our opinion as it lacks any expenditure control," Nomura analysts wrote.

The budget also assumes revenue of 408.5 billion rupees from telecoms sector fees, more than double what it will generate this year, with its next auction of mobile airwaves poised to flop after attracting just one bidder.

"The government may fall short of its tax and disinvestment targets and end up cutting spending closer to the end of the year to attain its fiscal deficit target," said A. Prasanna, economist at ICICI Securities Primary Dealership Ltd.

Net market borrowing of 4.84 trillion rupees for the new fiscal year met investor hopes that the figure would not top 5 trillion rupees, but the gross figure exceeded expectations.

The budget included several measures to spur investment both in markets and by corporations, including an incentive on investments in plant and machinery exceeding 1 billion rupees and extending tax breaks for small companies that grow larger, and an expansion of tax-free bonds for infrastructure.

Chidambaram has focused on winning back foreign investors unnerved by proposals of his predecessor, Pranab Mukherjee, to tax merger deals retrospectively and clamp down on tax evasion. Since September, he has implemented a spate of investor-friendly reforms, including allowing entry of foreign supermarkets.

"India, at the present juncture, does not have the choice between welcoming and spurning foreign investment. If I may be frank, foreign investment is an imperative. What we can do is to encourage foreign investment that is consistent with our economic objectives," he said.

Fending off 'junk'

India's fiscal and current account deficits have alarmed investors and ratings agencies, triggering warnings that the country's sovereign bonds could be downgraded to 'junk' status if urgent steps are not taken to rein in spending.

Chidambaram has staked his reputation on hitting a fiscal deficit target of 5.3% of GDP this year and 4.8% in 2013/14.

A no-nonsense, Harvard-educated, lawyer who commands both respect and fear in government, he squelched opposition from cabinet colleagues worried that spending cuts could ignite a backlash among voters.

Chidambaram has focused on winning back foreign investors unnerved by proposals of his predecessor, Pranab Mukherjee, to tax merger deals retrospectively and clamp down on tax evasion. Since September, he has implemented a spate of investor-friendly reforms, including allowing entry of foreign supermarkets.

Dozens of corporate executives, watching a telecast at an industry event, exchanged nervous smiles as Chidambaram introduced the surcharge on the rich.

"In the larger scheme of things, I guess that is one way of reducing his deficit. Am I going to lose sleep over it? No," Ganesh Natarajan, CEO of IT outsourcer Zensar Technologies, told Reuters by phone.

A flagging economy left Chidambaram with little room for big-bang populist measures without raising revenue, with economic growth for the current fiscal year on track to hit just 5%, nearly half of what it was in 2007/08.

"This country must not lose any time - India must get its act together to accelerate the tempo of growth," Prime Minister Manmohan Singh said in a TV interview after the budget speech.

The budget also reflects the realities of a country of 1.2 billion people, many of them poor.

"On the one side is the economic policy, on the other side is economic welfare. We are a developing country. The link between policy and welfare can be expressed in a few words: Opportunities, education, skills, jobs and income," Chidambaram said.

HT Poll: 

Hey, big spender

While the added spending included capital investment that many have said is sorely needed, including a 29% increase in funding for infrastructure and development, it also included a 46 percent jump in funding for development programmes in rural areas, the core voter base of the ruling Congress party.

An added surcharge on local firms with incomes of more than 100 million rupees and a 10% surcharge on individuals with taxable incomes topping 10 million rupees - a level of earnings currently declared by just 42,800 people - will be put in place for one year.

Dozens of corporate executives, watching a telecast at an industry event in New Delhi, exchanged nervous smiles as Chidambaram introduced the surcharge on the rich.

"In the larger scheme of things, I guess that is one way of reducing his deficit. Am I going to lose sleep over it? No," Ganesh Natarajan, CEO of IT outsourcer Zensar Technologies (ZENT.NS), said by phone from Pune, where the company is based.

Indian economic growth for the current fiscal year is on track to hit just 5 percent, nearly half its level in 2007/08.

"This country must not lose any time - India must get its act together to accelerate the tempo of growth," Prime Minister Manmohan Singh said in a TV interview after the budget speech.

The budget also reflects the realities of a country of 1.2 billion people, many of them poor. "On the one side is the economic policy, on the other side is economic welfare. We are a developing country. The link between policy and welfare can be expressed in a few words: Opportunities, education, skills, jobs and income," Chidambaram said.

Budget 2013: What's Cheaper, What's Costlier

 

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Mohandas Karamchand Gandhi About him Biography Mahatma History Family Tree Quotes Photos/Images

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Mohandas Karamchand Gandhi Biography:

Mohandas Karamchand Gandhi (October 1869 – 30 January 1948), commonly known as Mahatma Gandhi, was the preeminent leader of Indian nationalism in British-ruled India. Employing non-violent civil disobedience, Gandhi led India to independence and inspired movements for non-violence, civil rights and freedom across the world.

The son of a senior government official, Gandhi was born and raised in a Hindu Bania community in coastal Gujarat, and trained in law in London. Gandhi became famous by fighting for the civil rights of Muslim and Hindu Indians in South Africa, using the new techniques of non-violent civil disobedience that he developed. Returning to India in 1915, he set about organising peasants to protest excessive land-taxes. A lifelong opponent of "communalism" (i.e. basing politics on religion) he reached out widely to all religious groups. He became a leader of Muslims protesting the declining status of the Caliphate. Assuming leadership of the Indian National Congress in 1921, Gandhi led nationwide campaigns for easing poverty, expanding women's rights, building religious and ethnic amity, ending untouchability, increasing economic self-reliance, and above all for achieving Swaraj the independence of India from British domination.

Mohandas Karamchand Gandhi 

Gandhi led Indians in protesting the national salt tax with the 400 km (250 mi) Dandi Salt March in 1930, and later in demanding the British to immediately Quit India in 1942, during World War II. He was imprisoned for that and for numerous other political offenses over the years. Gandhi sought to practice non-violence and truth in all situations, and advocated that others do the same. He saw the villages as the core of the true India and promoted self-sufficiency; he did not support the industrialization programs of his disciple Jawaharlal Nehru. He lived modestly in a self-sufficient residential community and wore the traditional Indian dhoti and shawl, woven with yarn he had hand spun on a charkha. His chief political enemy in Britain was Winston Churchill, who ridiculed him as a "half-naked fakir." He was a dedicated vegetarian, and undertook long fasts as means of both self-purification and political mobilization.

In his last year, unhappy at the partition of India, Gandhi worked to stop the carnage between Muslims on the one hand and Hindus and Sikhs that raged in the border area between India and Pakistan. He was assassinated on 30 January 1948 by a Hindu nationalist who thought Gandhi was too sympathetic to India's Muslims. 30 January is observed as Martyrs' Day in India. The honorific Mahatma ("Great Soul"), was applied to him by 1914. In India he was also called Bapu ("Father"). He is known in India as the Father of the Nation;his birthday, 2 October, is commemorated there as Gandhi Jayanti, a national holiday, and world-wide as the International Day of Non-Violence. Gandhi's philosophy was not theoretical but one of pragmatism, that is, practicing his principles in real time. Asked to give a message to the people, he would respond, "My life is my message."

Early Life:

Mohandas Karamchand Gandhi was born on 2 October 1869 in Porbandar, a coastal town which was then part of the Bombay Presidency, British India.He was born in his ancestral home, now known as Kirti Mandir. His father, Karamchand Gandhi (1822–1885), who belonged to the Hindu Modh community, served as the diwan (a high official) of Porbander state, a smallprincely state in the Kathiawar Agency of British India. His grandfather was Uttamchand Gandhi, also called Utta Gandhi. His mother, Putlibai, who came from the Pranami Vaishnava community, was Karamchand's fourth wife, the first three wives having apparently died in childbirth. Jain ideas and practices powerfully influenced Gandhi, particularly through his mother, who was a devout Jain.

The Indian classics, especially the stories of Shravana and king Harishchandra, had a great impact on Gandhi in his childhood. In his autobiography, he admits that they left an indelible impression on his mind. He writes: "It haunted me and I must have acted Harishchandra to myself times without number." Gandhi's early self-identification with truth and love as supreme values is traceable to these epic characters.

In May 1883, the 13-year-old Mohandas was married to 14-year-old Kasturbai Makhanji (her first name was usually shortened to "Kasturba", and affectionately to "Ba") in an arranged child marriage, according to the custom of the region. In the process, he lost a year at school. Recalling the day of their marriage, he once said, "As we didn't know much about marriage, for us it meant only wearing new clothes, eating sweets and playing with relatives." However, as was prevailing tradition, the adolescent bride was to spend much time at her parents' house, and away from her husband. In 1885, when Gandhi was 15, the couple's first child was born, but survived only a few days. Gandhi's father, Karamchand Gandhi, had also died earlier that year.

Mohandas Karamchand Gandhi Images

Mohandas and Kasturba had four more children, all sons: Harilal, born in 1888; Manilal, born in 1892; Ramdas, born in 1897; and Devdas, born in 1900. At his middle school in Porbandar and high school in Rajkot, Gandhi remained a mediocre student. He shone neither in the classroom nor on the playing field. One of the terminal reports rated him as "good at English, fair in Arithmetic and weak in Geography; conduct very good, bad handwriting." He passed the matriculation exam at Samaldas College in Bhavnagar, Gujarat, with some difficulty. Gandhi's family wanted him to be a barrister, as it would increase the prospects of succeeding to his father's post.

Assassination:

On 30 January 1948, Gandhi was shot while he was walking to a platform from which he was to address a prayer meeting. The assassin, Nathuram Godse, was a Hindu nationalist with links to the extremist Hindu Mahasabha, who held Gandhi responsible for weakening India by insisting upon a payment to Pakistan.Godse and his co-conspirator Narayan Apte were later tried and convicted; they were executed on 15 November 1949. Gandhi's memorial (or Samādhi) at Rāj Ghāt, New Delhi, bears the epigraph "Hē Ram", (Devanagari: हे ! राम or, He Rām), which may be translated as "Oh God". These are widely believed to be Gandhi's last words after he was shot, though the veracity of this statement has been disputed. Prime Minister Jawaharlal Nehru addressed the nation through radio.

"Friends and comrades, the light has gone out of our lives, and there is darkness everywhere, and I do not quite know what to tell you or how to say it. Our beloved leader, Bapu as we called him, the father of the nation, is no more. Perhaps I am wrong to say that; nevertheless, we will not see him again, as we have seen him for these many years, we will not run to him for advice or seek solace from him, and that is a terrible blow, not only for me, but for millions and millions in this country." Jawaharlal Nehru's address to Gandhi

Quotes:

An eye for an eye only ends up making the whole world blind. 

A man is but the product of his thoughts what he thinks, he becomes. 

I like your Christ, I do not like your Christians. Your Christians are so unlike your Christ.

A 'No' uttered from the deepest conviction is better than a 'Yes' merely uttered to please, or worse, to avoid trouble.

You must be the change you wish to see in the world. 

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Lal Bahadur Shastri Biography Birthday Death Quotes History Photos/Images/Pictures Prime Minister

Lal Bahadur Shastri Biography.Lal Bahadur Shastri Birthday.Lal Bahadur Shastri Death.Lal Bahadur Shastri Quotes.Lal Bahadur Shastri History.Lal Bahadur Shastri Photos.Lal Bahadur Shastri ImagesLal Bahadur Shastri.Pictures.Lal Bahadur Shastri 2nd Prime Minister of India.

Lal Bahadur Shastri Biography:

Lal Bahadur Shastri (pronounced 2 October 1904 – 11 January 1966) was the second Prime Minister of the Republic of India and a leader of the Indian National Congress party.

Shastri joined the Indian independence movement in the 1920s. Deeply impressed and influenced by Congress leader Mahatma Gandhi, he became a loyal follower, first of Gandhi, and then of Jawaharlal Nehru. Following independence in 1947, he joined the latter's government and became one of Prime Minister Nehru's principal lieutenants, first as Railways Minister (1951–56), and then in a variety of other functions, including Home Minister. Shastri was chosen as Nehru's successor owing to his adherence of Nehruvian socialism after Nehru's daughter Indira Gandhi turned down Congress President K. Kamaraj's offer of premiership.

Lal Bahadur Shastri 

Shastri as Prime Minister continued Nehru's policies of non-alignment and socialism. He became a national hero following the Indo-Pakistan War of 1965. The war was formally ended in the Tashkent Agreement of 10 January 1966; he died the following day, still in Tashkent, of a heart attack.

Early Life:

Shastri was born in Mughal Sarai in the Chandauli district of the United Provinces, British India in British ruled India. His father, Shri Sharada Srivastava Prasad, was a school teacher, who later became a clerk in the Revenue Office at Allahabad. Shastri's father died when he was only a year old. His mother, Ramdulari Devi, took him and his two sisters to her father's house and settled down there.

Shastri was educated at East Central Railway Enter college in Mughalsarai and Varanasi. He graduated with a first-class degree from the Kashi Vidyapeeth in 1926. He was given the title Shastri ("Scholar"). The title was a bachelor's degree awarded by the Vidya Peeth, but it stuck as part of his name. Shastri was influenced by major Indian nationalist leaders including Tilak and Gandhi. Later he was greatly influenced by the socialism of Jawaharlal Nehru, whose left-wing faction in the Congress party he would eventually join.

In 16 May 1928, Shastri married Lalita Devi of Mirzapur. He had five children, including Hari Krishna Shashtri, Anil Shastri and Sunil Shashtri, who were all Congress politicians.  His son Anil Shastri is still a senior leader of the Congress party.

Prime Minister of India (1964-66):

Jawaharlal Nehru died in office on 27 May 1964 and left a void. Then Congress Party President K. Kamaraj was instrumental in making Shastri Prime Minister on 9 June. Shastri, though mild-mannered and soft-spoken, was a Nehruvian socialist and thus held appeal to those wishing to prevent the ascent of conservative right-winger Morarji Desai.

In his first broadcast as Prime Minister, on 11 June 1964, Shastri stated.

"There comes a time in the life of every nation when it stands at the cross-roads of history and must choose which way to go. But for us there need be no difficulty or hesitation, no looking to right or left. Our way is straight and clear—the building up of a socialist democracy at home with freedom and prosperity for all, and the maintenance of world peace and friendship with all nations."

Lal Bahadur Shastri Biography 

Death:

Prime Minister Shastri died in Tashkent due to a heart attack the day after signing the Tashkent Declaration. He was eulogised as a national hero and the Vijay Ghat memorial established in his memory. Upon his death, Gulzarilal Nanda once again assumed the role of Acting Prime Minister until the Congress Parliamentary Party elected Indira Gandhi over Morarji Desai to officially succeed Shastri.

Shastri's sudden death has led to persistent conspiracy theories that he was poisoned. The first inquiry into his death was conducted by the Raj Narain Inquiry, as it came to be known, however did not come up with any conclusions and today no record of this inquiry exists with the Indian Parliament's library. It was alleged that no post-mortem was done on Shastri, but the Indian government in 2009, claimed it did have a report of a medical investigation conducted by Shastri's personal physician Dr. R.N. Chugh and some Russian doctors. Furthermore, the Prime Minister's Office (PMO) revealed that there was no record of any destruction or loss of documents in the PMO having a bearing on Shastri's death.

The possible existence of a conspiracy was covered in India by the Outlook magazine. In 2009, when Anuj Dhar, the author of the book, CIA's Eye on South Asia, asked the Prime Minister's Office under an RTI plea (Right to Information Act), to declassify a document supposedly related to Shastri's death, the PMO refused to oblige, reportedly citing that this could lead to harming of foreign relations, cause disruption in the country and cause breach of parliamentary privileges.

An epic poetry book in Hindi titled Lalita Ke Aansoo written by Krant M. L. Verma was published in 1978. In this book the tragic story about the death of Shastri has been narrated through the mouth of his wife Lalita Shastri.

Memorials:

Shastri was known for his honesty and humility throughout his life. He was the first person to be posthumously awarded the Bharat Ratna, and a memorial "Vijay Ghat" was built for him in Delhi. Several educational institutes, Lal Bahadur Shastri National Academy of Administration (Mussorie, Uttarakhand) is after his name these were some examples. The Shastri Indo-Canadian Institute was named after Shastri due to his role in promoting scholarly activity between India and Canada. Today Lal Bhadur Shastri Memorialrun by Lal Bahadur Shastri National Memorial Trust, is situated next to 10 Janpath his residence as Prime Minister, at 1, Motilal Nehru Place, New Delhi. In 2011, on Shastri’s 45th death anniversary, Uttar Pradesh Government announced to renovate Shastri’s ancestral house at Ramnagar in Varanasi and declared plans to convert it into a biographical museum.

The International Airport at the City of Varanasi is named after him.

A Monument and a street is named after him in the city of Tashkent, Uzbekistan.

A stadium is named after him in the city of Hyderabad, Andhrapradesh

In 2005, the Government of India created a chair in his honour in the field of democracy and governance at Delhi University.

Quotes by Lal Bahadur Shastri:

If Pakistan has any ideas of annexing any part of our territories by force, she should think afresh. I want to state categorically that force will be met with force and aggression against us will never be allowed to succeed. 

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Diesel Price Hike in India Fuel New Delhi Latest News Bangalore Chennai Oil Today cost/rates

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Diesel Price Hike by 5/Litre, LPG cylinders cut to six a year:

Diesel Price Hike in India 

The Manmohan Singh government has bitten the subsidy bullet on fuel prices in the face of huge opposition not only from allied parties, but even within the Congress. The Cabinet Committee on Political Affairs on Thursday approved a Rs. 5 hike in the price of diesel. This excludes value added tax. Mulayam Singh Yadav’s party has already demanded a rollback.
The price of diesel, which is partially deregulated product, had last been hiked by Rs. 3 in July last year. The Rs. 5 increase does not include value added tax. Diesel will now cost Rs. 46.32 per litre in the Capital, and Rs. 51.25 in Mumbai.

The prices of petrol, LPG and PDS kerosene have been left unchanged, but the government has restricted the sale of subsidized LPG to six cylinders a year for each household. They will have to market rates for anything they use beyond that. To offset the loss from not hiking petrol prices at this time, it has proposed a reduction in excise duty on petrol by Rs. 5.30 per litre.

Reacting to the hike, 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. “An increase in diesel prices in India should avert a credit rating downgrade for the country.”

Diesel Price Hike in India Chart

The decision was also lauded by automobile association SIAM, with president S. Sandhiliya saying the hike was a " very good decision and I am happy very happy that the government has bitten the bullet as it is extremely important, and is in line with the recommendations".

The BJP has slammed the government, with senior leader Yashwant Sinha warned of mayhem in the economy. “This is going to cause undue hardship. Prices are not under control. This will lead to overall inflation,” he said. Prices, he said, could have been increased in small doses.

Kamal Farooqui of the Samajwadi Party too criticized the UPA government, saying it had taken a political decision, waiting for the monsoon session of parliament to get over. The jump is too big. We will demand a rollback. Definitely, we will ask for some consideration to be given, we are concerned,” he said.

The government subsidises the prices of diesel, cooking gas and kerosene to dampen inflation and protect the poor, a popular policy that has put a severe strain on public finances.

The government has acknowledged earlier that a price hike is essential for curbing fiscal deficit, a pre-condition for reviving growth in Asia's third largest economy. A price increase will also aggravate inflation, as costs, such as road freight rates, will rise.

State-run oil marketing companies are losing Rs. 550 crore everyday on under-recoveries as a result of higher crude prices in the global markets. They make a loss of Rs. 17/litre on diesel sales, Rs. 32.7/litre on kerosene sales, and Rs. 347/cylinder on cooking gas sales every day.

The move was welcomed by oil companies. R.K. Singh, CMD at Bharat Petroleum, said: “This is a very good decision, and will certainly help oil companies and reduce the burden on the government in terms of subsidies. The reduction in the excise duty on petrol is good for us.”

Diesel Price Hike in India Graph

"This is a welcome move and is very good for the oil industry," Oil India CFO T.K. Ananth Kumar said.

R.S. Butola, chairman of Indian Oil Corporation Ltd told NDTV that the company is committed to cutting petrol prices whenever possible. “Diesel accounts for 53 per cent of total subsidies. Oil companies are running a deficit of Rs. 6,000 crore every month. By reducing the excise duty on petrol, we have narrowed the gap between the prices of petrol and diesel. A narrow margin will be good for economy. If global petrol prices fall, we will pass on the benefits,” he added.

The increase in diesel prices will aid in trimming the fiscal deficit and improve economy's credit rating, PMEAC chairman C Rangarajan, told CNBC-TV18 on Thursday. The government raised the price of heavily subsidised diesel in a politically risky move to rein-in fiscal deficit and fight the threat of being the first in the BRICS group of emerging economies to be downgraded to 'junk'.

Meanwhile, Pronab Sen, principal advisor, Planning Commission, explained that there is a difference between rise in prices and inflation. He added that the diesel price hike will impact inflation only by around 12%.

However, both experts concurred that the government’s decision has allowed the RBI adequate headroom to act on monetary policy.

Diesel Price Hike in India Today

Below is an edited transcript of their reactions on CNBC-TV18.

Q: This what the PMEAC had been recommending and a decision has been finally taken atleast as far as diesel is concerned. What does this mean in terms of fiscal consolidation?

Rangarajan: I think it will significantly contribute to containing the fiscal deficit. Though the loss in revenue due to the reduction in excise duty needs to be estimated, on the whole, this as a bold step taken by the government towards achieving a balance in the fiscal situation.

Q: But though the government has finally moved on diesel, it has left petrol untouched. Though the government is suffering an under-recovery of about Rs 6 a litre on petrol, the most that has been done is a bit of tinkering with the excise duty on the petrol?

Rangarajan: I think the oil marketing companies will not lose much on petrol because some adjustment has been made to allow them the benefits of a reduction in excise duty. It is important that a balance is maintained between the price of petrol and diesel.

Q: What will this mean in terms of possible RBI response? Is this enough in terms of providing the central bank adequate fiscal room that it looked forward to from New Delhi?

Rangarajan: I think the opportunity for action by the Reserve Bank has been provided by this decision of the government. The RBI will take another look at the inflation data that maybe released in a day or two and then make its move. But the government has boldly shown that it can take very hard and difficult decisions and the RBI should welcome that.

Diesel Price Hike in India List of Prices

Q: Finally the government is biting the bullet by hiking diesel prices by Rs 5 a litre, However the opinion of the RBI and the finance ministry differ regarding the probable impact on inflation. What is your view?

Pronab Sen: We really need to distinguish between rise in prices and inflation. Inflation is a process and something like a diesel price hike will impact inflation only by around 12%.

Q: Do you think there is enough fiscal space already for the Reserve Bank to move on September 17 or will the central bank be well advised to wait for further rollbacks?

Pronab Sen: I have a feeling the RBI  will wait to see if there is a rollback. But even if there isn't a rollback, it would be prudent for the RBI to wait and gauge the level of expectations. So, it does give the RBI a lot more space to relax on monetary policy, but I am not sure if it would reduce policy rates. The RBI may actually just ease up on the liquidity side.

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Diesel price hike: Govt under fire from allies, Opposition, aam aadmi:

New Delhi: The government has finally bitten the bullet on fuel price hike raising the price of diesel by Rs 5 per litre and limiting the usage of LPG to six cylinders per household. Sources say the Sonia Gandhi-led Cabinet Committee on Political Affairs was against it, but were finally convinced by Prime Minister Manmohan Singh to end policy paralysis and bring in big ticket reforms.

But the the government now finds itself under fire from not just the Opposition, but its own allies as well as the 'aam aadmi'. Trinamool Congress chief and West Bengal Chief Minister Mamata Banerjee was the first to react. She will take out a rally on Saturday in Kolkata, demanding a rollback.

Speaking to IBN18 Editor-in-Chief Rajdeep Sardesai, Mamata said, "It wasn't discussed with the UPA allies. I have a great respect for UPA because we know that the government must continue, there should be stability. But at the same time if the deisel price is increased, it will affect the farmers, it will effect the common people and it is very difficult as people cannot survive with this."

She said that the matter was quite serious and her party would not tolerate things that affect people, adding that the government must withdraw the hike.

Key UPA ally DMK, too, has condemned the hike. Party supremo Karunanidhi said, "Already the prices of essential commodities are so high. This hike would further affect the poor and the middle class and increase inflation."

Opposing the diesel price hike, UPA's close ally NCP also demanded a rollback saying the decision will further burden the common man.

"The Centre should consider rollback in diesel price and should not put a cap on subsidised LPG especially given the high price of essential goods thereby affecting the common man," NCP spokesperson Nawab Malik said.

Terming the hike in diesel price as an anti-people step by Congress-led UPA government, the Samajwadi Party announced that it would hold a sit-in against the move across the state.

"The move to hike diesel price is anti-people and will increase prices. Samajwadi Party opposes the move and will hold sit-in across the state to protest the hike," SP spokesman Rajendra Chaudhary told PTI.

BJP leader Yashwant Sinha said, "Diesel increase will have a cascading effect on the economy as a whole. Prices are already not under control, so this is going to contribute to overall inflation and create mayhem in the economy."

Diesel Price Hike in India - Common man Position

CPI National Secretary D Raja termed the decisions as "retrogade and anti-people". "It will have an adverse effect on the prices of essential commodities which are already high. It will further increase hardship of common people. Government should not go ahead," he said.

The 'aam aadmi' was the worst affected. "This decision is going to adversly affect a hard working common man like me. It's getting difficult to drive a car these days," said a consumer in Delhi.

Another consumer in Mumbai said, "The increase in the price of diesel will affect the poor like us the most. As a result of this inflation will increase."

INTEREST RATE MOVE?

The diesel decision was welcomed by investors.

"This is a positive signal because it shows the government is ready to move. But this is only the first step, and lot more needs to be done to bridge the fiscal gap," said Indranil Pan, chief economist at Kotak Mahindra Bank in Mumbai.

On Monday, the RBI is expected to leave interest rates on hold, although several market players said the diesel move adds to the possibility of the first rate cut since April.

"All these days RBI was insisting the government should take steps to control the fiscal deficit. After this move there are all possibilities that the central bank may consider to reduce interest rates on Monday," said R.K. Gupta, managing director of Taurus Mutual Fund in New Delhi.

India has set a target to cut its fiscal deficit to 5.1 percent of GDP in the financial year that ends in March, a goal many economists say it is unlikely to meet.

India's inability to push through major reforms and ease its subsidy burden puts it in danger of becoming the first of the big "BRICS" emerging economies to see its credit rating downgraded to junk.

Later on Friday, the cabinet is expected to consider a proposal to allow foreign airlines to buy stakes in local carriers, a long-stalled move aimed at revitalising the country's debt-ridden domestic carriers, although overseas airlines have shown little interest in investing.

Under current rules, foreign airlines are barred from buying stakes in domestic carriers, although foreign investors are allowed to hold a cumulative 49 percent. If the proposal is approved, foreign airlines would be allowed to buy similar-sized shareholdings.

Whether the diesel price hike sticks remains to be seen.

A leading partner in the ruling coalition announced a protest march at the weekend and the main opposition party called the move "financial terror". Protests earlier this year over petrol price and railway fare hikes prompted Singh to partially roll them back. (Reporting by Rajesh Kumar Singh, Nidhi Verma and Manoj Kumar; Writing by Tony Munroe; Editing by Alex Richardson)

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