New Delhi, July 24: The petroleum ministry plans to move the Cabinet Committee on Economic Affairs for a hike in diesel and domestic LPG cylinder prices, which have not been revised for more than a year.
"The most important reform is not allowing FDI in retail, but cutting subsidies on diesel, LPG and kerosene," a senior oil ministry official said.
He said "there is consensus that prices of diesel, LPG and even kerosene have to be raised. But when and how is uncertain as the Congress party, which leads the coalition government, does not have sufficient votes to back up a unilateral decision on such a key issue".
A ministerial panel which is authorised to decide on the pricing of the three fuels has not been reconstituted after its previous head Pranab Mukherjee resigned as finance minister to get elected as the President.
In the absence of the empowered group of ministers (EGoM), the ministry is contemplating sending a price hike proposal to the CCEA and leaving the decision to the Prime Minister, the official said.
Sources said the monsoon session of Parliament, which begins in about a fortnight, gave the government a narrow window of opportunity to raise prices.
Any substantial hike close to the session will be seized by the Opposition to disrupt proceedings in Parliament, which is scheduled to discuss some important bills.
Diesel prices are considered politically sensitive because any hike would impact the cost of food articles, transportation and trigger discontent among voters.
According to latest government data, diesel sales rose 13.9 per cent in June to 6.08 million tonnes from a year earlier, while petrol consumption picked up 7.2 per cent to 1.34 million tonnes.
Demand for diesel, which accounts for over 40 per cent of refined fuel consumption in the country, is set to rise 5.9 per cent to 68.55 million tonnes, while that of gasoline is expected to grow 5.8 per cent to 15.86 million tonnes in the current fiscal, the government has said.
Gas pricing
The government has reconstituted the high-powered ministerial panel which would decide if the price of natural gas produced by Reliance Industries from KG-D6 fields can be revised before 2014.
"The empowered group of ministers has been reconstituted. It will now be headed by defence minister A K Antony," oil ministry official said.
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