The price rises will affect India's taxi drivers

With 99% of India's filling stations in the hands of state-run oil firms, petrol pump prices will be made the same as that of imports.

The price of diesel will go up by a lesser extent, but no figure was given.

It is the first time that the Indian government has increased prices since August, despite global surges.

Analysts said it has held off until now due to pressure from its communist allies.

Inflationary concern

Cooking gas prices will be increased by 20 rupees (44 cents; 24 pence) a cylinder immediately and five rupees every month thereafter.

The cost of kerosene, used as a fuel by millions of India's poor, will remain the same, also, analysts say, because of communist pressure.

India's state-run oil firms suffered a revenue loss of 100 billion rupees between April and September of this year.

Analysts warn that the higher fuel prices would raise inflation.

"Of course, inflation will go up because of the direct and indirect impact of the price increase in petroleum products," said DH Pai Panandikar, president of a private economic think-tank, RPG Foundation.

India's wholesale price inflation has hovered above 7% for nearly three months, compared with 4.32% in April.

And last month the Indian central bank said the high price of crude oil, India's biggest import, posed a risk to demand in the economy.