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Diesel, Cooking Gas Price May Hike

Support for high fuel bills as the government has officially started the discussion process for increasing diesel and cooking gas prices the latter with an augmented yearly cap of nine subsidized refills, in line with the proposals of a finance ministry panel.

The committee under ex-bureaucrat Vijay Kelkar, tasked to propose a roadmap for cutting fiscal shortfall, has suggested raising diesel price occasionally to line up it with market rate by the opening of 2014-15 fiscal. The panel also recommended raising cooking gas and kerosene prices. Diesel is the most important fuel for transportation and farming areas. Any augment in the fuel's price has a flown effect on the cost of daily living. Deregulation would signify either hiking the price by Rs 10 a liter or Re 1 every month for the next 10 months.

That's why the government may not right away deregulate diesel to avoid strengthening public rage and giving the economy a shock. Instead, it may seem at a incomplete float of the price by setting a fixed subsidy as say Rs 5 a liter. Under this system, the fuel's pump price would be hiked if the market rate rises further than the fixed subsidy.

Oil minister M Veerappa Moily on Friday told that the Kelkar proposals are "a proposal" and his ministry was "only dealing out that report and we are still to take a decision". Even finance minister P Chidambaram on Wednesday had told that the deregulating diesel cost was not a "one-dimensional" topic and the government would have to adjust the different "dimensions" before taking a decision.

On higher subsidized cooking gas limit, Moily established the government was allowing for raising the limit to nine per household in a year from the existing six. But the higher cap could come with Rs 110 raised in the cost.

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