New Delhi: Petroleum And Natural Gas Minister Veerappa Moily Moily on Friday said that a hike in diesel and LPG prices could be announced soon. 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 Kelkar Committee had suggested drastic reforms in oil pricing and sources say the Petroleum and Natural Gas Minister is considering Rs 4.50 hike in diesel price and Rs 100 hike in LPG.
Planning Commission Deputy Chairperson Montek Singh Ahluwalia on Thursday said the government was looking to hike GDP growth to 8 per cent in two to years and was willing to take tough decisions. He said the decision to increase fuel prices will be taken in a week or two.
The Oil Ministry has made a proposal to Cabinet to raise diesel prices and increase the number of subsidised LPG cylinders available to households to nine a year from the current cap of six, two oil ministry sources said on Wednesday. The proposal has got the approval of both Prime Minister Manmohan Singh and UPA Chairperson Sonia Gandhi.
The government argues this would help counter Rs 160,000 crore deficit. India, which imports more than 80 per cent of its fuel needs, liberalised petrol prices in June 2010 but continues to regulate diesel prices to protect the poor. Prime Minister Manmohan Singh has recently said the country must gradually bring local fuel prices in line with global prices.
Manmohan Singh had warned that the government must raise diesel, kerosene and cooking gas prices in a phased manner as India's fuel prices are well below international prices. "Energy remains under priced in our country, with coal, petroleum products and natural gas prices well below international prices. To meet our target of rapid, inclusive and sustainable growth we must undertake a phased rationalisation of energy prices to bring them in line with world prices," he had said on Monday.
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.