12-cylinder carrot to lure support for fuel price hike
Sources told FE that a compromise is being worked out after some Cabinet ministers termed the six-cylinder cap and the proposed fuel price hike as “politically suicidal”. A section of the ruling coalition too feels these steps could cost the UPA at the hustings.
After capping subsidised LPG cylinders at six, the government was planning to raise it to nine citing consumer interest. Increasing this to 12 would benefit consumers in cities and help the UPA protect its middle class vote bank, sources said.
The oil ministry’s proposal to the Cabinet Committee on Political Affairs, the body empowered to take a decision on fuel prices, was based on the recommendation of the Vijay Kelkar committee, which was appointed by the finance ministry to suggest a road map for fiscal consolidation. “The recommendations of the Kelkar committee are under serious consideration,” petroleum and natural gas minister M Veerappa Moily said on Friday.
The ministry proposes to increase the price of subsidised domestic LPG in two phases of R65/cylinder each before March 31, 2013. Price will be hiked further by R50 each till the under-recovery on the product is reduced to zero.
On diesel, the ministry proposed a R3-4.50 per litre hike in one go or in monthly instalments
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