M Veerappa Moily meets P Chidambaram to discuss ways to cut oil import bill

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SummaryTight on finances, the finance ministry has no means to meet half of the losses by way of cash subsidy.

one Indian rupee depreciation in the local currency against the dollar adds Rs 8,000 crore to the under-recovery while a one dollar per barrel increase in international prices results in Rs 4,800 crore additional outgo.

The government had in January allowed oil companies to raise diesel rates by up to 50 paise per month until losses on the most-consumed fuel in the country are wiped out.

Oil companies feel a 50 paise hike is insufficient and there should be a higher, one-time increase to cover for the fall in the rupee.

The price of diesel was last increased on August 1, when prices in Delhi went up by 56 paise (including local taxes) to Rs 51.40 per litre.

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