Diesel price hike of Rs 4.50/L, LPG cylinder by Rs 100, demands Oil Ministry

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SummarySources said that since the Finance Ministry has refused to bear additional subsidy...

The Oil Ministry has proposed a Rs 3-4.50 per litre hike in diesel price and Rs 100 in LPG rates along with raising the number of subsidised cooking gas cylinders for households to nine a year from the current cap of six.

The Ministry has moved a note for consideration of the Cabinet proposing options for meeting a record Rs 160,000 crore deficit arising from selling auto and cooking fuels below their cost.

Sources said that since the Finance Ministry has refused to bear additional subsidy arising from raising cap on supply of subsidised LPG, the ministry has proposed to make up for the shortfall by raising prices.

It has proposed to raise LPG rates by Rs 100 per 14.2-kg cylinder in two installments to make up for a fifth of the Rs 490.50 per bottle loss being incurred currently.

The ministry has proposed quarterly increases of Rs 50 per cylinder from April till the entire losses are wiped-off.

On diesel, it has proposed a 3-4.50 per litre hike in one go or in monthly instalments of Re 1 or Rs 1.50 per litre.

From April, it wanted Re 1 a litre increase every month till such time that the current loss of Rs 10.16 is wiped out.

Sources said the ministry has also proposed raising kerosene price by 35 paise a litre per month or Re 1 a litre per quarter till March 2015.

The ministry's proposal, however, is unlikely to come up at tomorrow's Cabinet meeting, they said.

According to ministry estimates, raising the cap to nine subsidised cylinders would lower savings to Rs 2,500 crore per annum, compared to the savings of Rs 12,000 crore estimated when six cylinders are issued at subsidised rates and the rest sold at market price.

In September, the government limited the supply of subsidised LPG cylinders to six per household in a year, leading to protests from both within the ruling alliance and outside.

Sources said the ministry's note to Cabinet is based on recommendation of the Vijay Kelkar Committee, which was appointed by the Finance Ministry to suggest a roadmap for fiscal consolidation.

The panel had recommended an immediate hike in

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