The government will decide on raising the retail prices of diesel and cooking gas (LPG) in a few weeks, the oil secretary said on Thursday, in a bid to cut the biggest item in its import bill and support the local currency.
India, the world's fourth-biggest oil consumer, is considering a Rs 3-5 hike in the price of diesel, which accounts for more than 40 per cent of fuel use, government officials said last week, as the country looks to cut import costs by nearly $20 billion to trim a record current account deficit.
A recent sharp recovery in the rupee, which had hit a record low of 68.85 to the dollar on August 28, and a fall in global crude prices following an easing of geopolitical tensions -- with an attack on Syria appearing less imminent -- have taken off some pressure from the government finances, Oil Secretary Vivek Rae said.
Fuel price rises generally provoke stiff resistance from Opposition parties, and any increase now is expected to draw a bigger protest as India approaches a general election. The election must be held by May 2014.