India government faces heat over diesel hike

NEW DELHI (AP) - India's beleaguered government faced angry protests from its political allies as well as the opposition on Friday after it raised the price of diesel fuel in a bid to curb a ballooning national deficit.

The government raised the price of diesel by five rupees (10 Singapore cents) a litre on late Thursday. The price of diesel is regulated and kept much lower than gasoline prices in India. But the government has been under intense pressure to reduce its fiscal deficit by cutting spending for subsidies, particularly on fuel.

The subsidy reduction is part of the government's economic reform program. The delay in those reforms has been blamed in part on a sharp drop in India's growth rate and the rapid fall in the value of the rupee.

Concerned by India's massive subsidy bill, ratings agencies have threatened to downgrade India.