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NEW DELHI: "Even after so many years, we have not learnt our political lessons," A K Antony commented during Thursday’s Cabinet discussion on the manufacturing policy. The defence minister’s remark, made in relation to the sensitivity of acquiring land for setting up manufacturing zones, appeared more apt after government’s handling of petrol price issue.

The state-run oil marketing firms jacked up petrol price by Rs 3.14 a litre on Thursday. The oil companies have been hankering for an increase for over a month. But the oil ministry granted their wish just a day before the RBI was expected to raise key interest rates and a ministerial panel was to discuss limiting the number of subsidised cooking gas cylinders to four a year.

The timing of the increase sharpened the focus of consumer and political anger. It also queered the pitch for capping cooking gas cylinders per household: a plan that would have given more money to the oil companies and also saved some Rs 12,000 crore in subsidy for the government. Not surprising then the ministerial panel put off the meeting to discuss the plan due to opposition from allies Trinamool Congress and the DMK.

There is a strong view in government quarters that the oil ministry should have asked the companies to wait -- at least for a fortnight. More so since the impact of high crude price was Rs 1.72 a litre, not something that the companies couldn’t have borne for some more time. A little more time would have allowed some of the shock from higher interest payouts to dissipate, pared the quantum of hike in petrol price and avoided opening another front for the government.

On his part, IndianOil chairman R S Butola said the industry had no option but to raise the price in view of a sharp rise in global price of crude and petrol as well as the rupee’s depreciation. "We lost Rs 1,100 crore on petrol in the first quarter, which will not be compensated by the government. The picture remains bleak. The rupee’s fall made our oil buys more expensive and left us no option... we will reduce the price the moment there’s a decline in international rates."

Butola argued that petrol price before the increase was aligned to $103/barrel crude, while the company was buying oil at an average of $111. In 2010-11, the average was $85. Besides, petrol was trading at $125/barrel in the benchmark Singapore market - which too has a bearing on domestic prices - against $119 earlier. The average last year was about $96.

While this is true, not many are buying the argument on the rupee’s value. A fall for a few days does not have a major impact in the long term. Already, the currency has been regaining lost ground against the dollar over the last two days and is expected to climb further.