UPDATE 2-India raises fuel prices for first time in a year
* India increases gasoline prices 10 pct, diesel by 6.5 pct
* First increase this year as state refiners incur losses
* Analysts await details on liberalisation next week
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By Nidhi Verma
NEW DELHI, July 1 (Reuters) - India unexpectedly raised gasoline and diesel prices by as much as 10 percent on Wednesday, its first increase this year, passing some of oil's rally into an economy just beginning to find its feet amid a global recession.
The hike will aid margins for state-owned refiners forced to sell at government-set prices, likely further lifting shares in Indian Oil Corp (IOC.BO) and its peers, and could be a prelude to greater free-market price reforms in next week's budget.
It will also trigger some increases in prices but the economy can easily absorb the rise as India's wholesale price index is forecast to have fallen 1.35 percent in the year to June 20, the third straight fall, according to a Reuters poll.
Petrol prices in Delhi will rise by 4 rupees a litre, while diesel rates will rise by 2 rupees a litre, Oil Minister Murli Deora told reporters. For a table on India's fuel price in recent years, see [ID:nDEL459859].
Prices were last raised in June last year, when the average price of India's crude imports was $113 a barrel, but they were cut in December and again in January as oil tumbled. U.S. crude oil prices CLc1 have more than doubled since a February low, with second-quarter gains the highest since 1990.
"In view of the increase in the price of crude oil ... it has become inevitable to revisit the prices," Deora said.
Oil Secretary R.S. Pandey said oil firms would still suffer a revenue loss even after the rise, and this burden would fall mainly on oil producers like Oil and Natural Gas Corp (ONGC.BO).
The government has not increased the price of cooking gas and kerosene to protect the poor and middle-class.
Deora said despite price the increase, oil firms were likely to suffer a revenue loss of 560 billion rupees ($11.7 billion) on sale of petrol, diesel, cooking gas and kerosene this fiscal.
