Fuel price protesters take to streets in India and Malaysia

Protests erupted in India and Malaysia today over sharp fuel price rises that could undermine governments in both countries.

Petrol in Malaysia jumped 41%, while diesel rose a stunning 67%.

The petrol increase in India, the second this year, was smaller – about 11% in the capital, New Delhi – but will still weigh on consumers. India also raised prices on diesel and cooking gas.

The two Asian nations announced yesterday they were cutting fuel subsidies because of soaring crude oil prices. But critics denounced the move as burdening the poor.

The biggest protests in India were in West Bengal state, where schools and businesses closed and flights and trains were cancelled. Shops were also closed and roads emptied in the southern state of Kerala, with protests also reported in the central city of Indore.

India’s communist parties, which control both Kerala and West Bengal, have called for a week of protests across the country, saying import duties on oil should be further cut instead of raising retail prices.

In Malaysia long lines of vehicles formed at service stations to fill up before midnight when the new pricing came into effect, and fights broke out as some motorists tried to queue jump.

Today the stations were mostly deserted. The opposition Democratic Action Party staged a small protest in Kuala Lumpur and vowed more rallies to demand the government back down from the plan.

An anti-inflation coalition of opposition parties and other groups, is planning rallies nationwide which will peak in a mass demonstration in Kuala Lumpur on July 12.

Like many Asian countries, Malaysia, is struggling with a growing fuel subsidy bill that may exceed £7 billion this year as global oil prices rocket.

India, which imports 75% of its crude oil, has said the rises will help cover losses at state-run oil companies which have been unable to pass on to consumers the higher fuel costs due to price controls.

Government coffers have been shrinking as crude oil prices doubled over the last year, hitting 135 dollars a barrel last month before falling back to 122 dollars yesterday.

Indonesia, Taiwan and Sri Lanka have also recently raised fuel prices.

Increased fuel prices are expected to send the cost of food, transport and other essentials higher, piling further inflationary pressure on India and Malaysia.

Protests over the price hikes may further weaken Prime Minister Manmohan Singh’s government ahead of an election in India by the middle of next year, analysts said.

In Malaysia, Prime Minister Abdullah Ahmad Badawi faces increasing risks as he fights for his political survival after shock election losses in March.