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Jan 17, 2013 at 11:56am IST

Ballooning subsidy bill behind diesel, LPG price hike proposal

New Delhi: The Union Cabinet will take a decision on increasing diesel and LPG prices on Thursday. Diesel prices may be hiked by Rs 4.50 per litre. The Petroleum Ministry has proposed to increase diesel, kerosene and cooking gas rates. There is also a proposal to raise the ceiling on number of subsidised LPG cylinders from six to nine.

If diesel price is increased, it will lead to an increase in the prices of vegetables, fruits and other food items, hitting the kitchen of the common man very hard. According to the sources, now subsidised cylinder may also become expensive. Cylinder prices may be hiked by Rs 120 in Delhi where it is presently available for Rs 400. If the Cabinet approves the proposal then the price will be Rs 520

Kerosene price may be hike Rs 2.00 per litre. Petroleum And Natural Gas Minister Veerappa Moily said that a hike in diesel and LPG prices could be announced on Thursday. Moily said that the Kelkar Committee recommendations were under consideration and a decision will be taken as quickly as possible on fuel price hike. The subsidy on diesel is Rs 96,000 crore while LPG subsidy is Rs 9,000 crore which is very small comparison to that of diesel.

Huge subsidy behind diesel, LPG price hike proposal

The subsidy on diesel is Rs 96,000 crore while LPG subsidy is Rs 9,000 crore which is very small in comparison to that of diesel.

The Kelkar Committee has recommended that the government cut subsidies in food, fuel and fertiliser in order to narrow down its fiscal deficit. The committee warned that India was on the edge of a 'fiscal precipice' and if measures were not taken soon, it would have a big impact on the Indian economy.

The Kelkar report further said that the current deficit level of 5.1 per cent could balloon up to 6.1 per cent if no measures were taken, and that would hit the economy.

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