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Decision on hike in LPG, diesel likely by June 9
Published on 30 May. 2011 1:46 AM IST
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Trumping political resistance to fuel price hikes, the government has cleared the decks for an increase in diesel, cooking gas and kerosene prices in the face of rapidly deteriorating finances of state-run oil marketing companies. The decision to raise prices is likely to be taken on June 9, when the ministerial panel on fuels under finance minister Pranab Mukherjee is expected to meet. The oil ministry wants to raise diesel price by Rs 4 a litre but a Rs 2-3/litre hike looks more likely. It is also pushing for Rs 25-50 per rise in the price of a cooking gas refill.
The government is also worried by higher cost of petrol spurring growth of diesel vehicles and the oil ministry plans to propose a cess on sale of private vehicles running on diesel. Government sources said there is an urgent need for “de-dieselisation” of the transport sector, with private transport consuming 15% of the fuel and power generators accounting for another 8%.
Increasing the cost of kerosene will not be easy as it is seen as the poor man’s fuel. But the oil ministry is arguing that half-measures are not working. The recent Rs 5 a litre hike in petrol helped subsidy bill only partially as a Rs 9 hike is actually what had been required. Low kerosene prices are, in fact, encouraging adulteration of diesel.
The “nothing is sacred” mantra has to run the gauntlet of political arguments within government and the Congress but with state elections out of the way, fuel shock cannot be delayed much further. The quantum of increase is being debated but if the determination to hike kerosene rates is any indication, the bite will not be without sting.

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