NEW DELHI. Aug 7: Bowing to pressure from the opposition and a powerful peasant lobby, India's minority government announced Tuesday that small farmers would be spared a hike in fertilizer prices, reports AFP.

France Minister Manmohan Singh also cut by 10 per cent the 40 per cent hike in fertilizer costs he had announced in the federal budget July 24. but stuck to his decision to hike cooking gas prices by 20 per cent.

Singh's announcement, which would cost the cash-strapped government about 200 million US Dollars was Cted with the Thumping of

is by ruling Congress (I) Party members tn the

Parliament.

The minister said he had, estimated a saving of about 700 million US dollars when he proposed the hike, but the saving would now come down to 500 million dollars.

He said he had made the concessions tn line with the "basic philosophy of the budget: to spare the poor and in a gesture of commitment to protect small and marginal farmers, who account for 30 per cent of India's fertilizer consumption.

The announcement came after criticism from sections of the Congress (I) Party which believed the price hike would alienate the rural millions who depend for a living on agriculture.

Opposition parties who together command enough seats in parliament to defeat the government had threatened to vote out the budget a move that would have toppled the Congress (I) from power.

In Prime Minister P. V. Naraslmha Rao’s home state. Andhra Pradesh in the South, farmers enraged by the hike had burned fertilizer storage sheds and blocked traffic, and street protests were staged elsewhere against "anti-peasant" policies.

Fertilizer subsidies bum a huge hole in India's coffers, and the price hike at a time of austerity was seen by Independent observers as a sign of

pragmatism.

Fertilizer prices had not been raised for a full decade during which” agricultural and non-agrlcultural prices almost doubled, and subsidies have been mainly to the advantage of big farmers, critics have said.

The concessions announced Tuesday amounted to a second setback on the budget for the government, which last week bowed to opposition pressure and scrapped a" 38.5 million Dollar grant for private foundation named after slain former Premier Rajiv Gandhi.

The right-wing Bharatiya Janata Party (Indian People's Party) welcomed the slashing

of the hike and the Congress (1) called it a "major step towards furthering the party's objective to promote social Justice."

But Singh held firm on a 20 per cent hike in cooking gas prices. Justifying It on the grounds they had not been raised for five years and defended himself against charges that he had tailored the budget to IMF dictates.

India is negotiating with the Internationa) Monetary Fund for a huge loan to rescue Its ailing economy, and the opposition has charged that the slashing of subsidies and moves to decontrol trade and industry werd Influenced by

the agency.

Singh said conditions were inevitable in any lending programme, but India wouM^ac-ccpt none that were harmful to ILs national Interests.

We need not fear going to the IMF." he said In his reply to a long discussion on the budget. "We have been borrowing from the IMF. China has been going to the IMF. The USSR is seeking entry into IMF.

He. however, refused to reveal the conditions that would accompany IMF credits, saying if the detail* were disclosed we will be negotiating with both our hands tied behind our backs