Decision on Fuel Price Hike Today?

Petrol and diesel prices would witness a substantial hike this week if the much awaited meeting of a key group of ministers Monday takes a final call on the proposal seeking an end to state control over fuel prices, say media reports.

According to reports, the group is also likely to consider an upward revision in kerosene prices and limit the supply of LPG cylinders to 5 a year per connection at existing prices.

According to media reports, while the finance ministry is concerned over the huge surge in fuel subsidy expenditure, expecting it to shoot up to Rs. 80,000 crores this fiscal, the biggest challenge facing finance minister Pranab Mukherjee, who heads the  Empowered Group of Minister (EGoM), will be to convince Trinamool Congress chief Mamata Banerjee, who could object to a hike in kerosene and diesel prices.

Petroleum and natural gas minister Murli Deora on Saturday met Prime Minister Manmohan Singh to discuss the fuel price issue as well as decontrol of petroleum products.

If the EGoM approves hike in fuel prices, this would be the second such hike this year as Mukherjee had raised taxes on petroleum products in his February budget this year that made petrol costlier by Rs 2.71 and diesel Rs 2.55 a litre.

The move to free auto fuel prices was based on the recommendations of the Kirti Parikh Committee, which was constituted to suggest an all-acceptable mechanism for pricing petroleum products.

Petroleum and natural gas minister Murli Deora on Saturday met Prime Minister Manmohan Singh and discussed the fuel price issue as well as decontrol of petroleum products.
The recommendations to free auto fuel prices were made by the Kirti Parikh Committee, constituted to suggest a satisfactory method for pricing petroleum products.

The committee had recommended that the government end state control over pump prices of petrol and diesel and also raise prices of kerosene and cooking gas.

Currently state-run oil marketing companies sell auto and cooking fuels at government-approved prices to help control inflation despite losing nearly Rs 3 in sale of petrol and diesel a litre.

The reports say that even if the government does decide to end its control over fuel prices, such a decision would be accompanied with riders which would enable the government to step in should such a need arise.
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