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A rate hike may become inevitable, as the government's limited financial resources are not enough to meet the revenue lost on selling petrol, diesel, LPG and kerosene below cost
The Indian government may decide on freeing petrol and diesel prices after an expert committee on fuel pricing submits its report this week, petroleum minister Murli Deora said on Monday, reports PTI.
Finance minister Pranab Mukherjee is believed to be in favour of giving state-run oil companies freedom to fix prices of petrol and diesel in step with costs, as he feels that the current moderate global oil rates may be the last window India has to deregulate fuel pricing.
"We are trying our best to see that prices are not raised," Mr Deora told reporters. But a rate hike may become inevitable as the government's limited financial resources are not enough to meet the revenue lost on selling petrol, diesel, LPG and kerosene below cost.
"The Cabinet had in July 2009 decided that the government will meet all of the under-recovery (revenue loss) on domestic LPG and kerosene either through bonds or in cash and the same on petrol and diesel was to be met by upstream companies like Oil and Natural Gas Corp (ONGC)," he said.
While ONGC, Oil India and GAIL shouldered the entire Rs8,364 crore under-recovery on petrol and diesel in the first three quarters of the current fiscal, the government has agreed to give only Rs12,000 crore in cash against the Rs20,989 crore revenue loss on cooking fuel in April-December.
"We will be meeting the finance minister tomorrow to see how this under-recovery is to be met," Mr Deora said, adding that a decision on fuel pricing was likely only after the Kirit Parikh committee submits its report this week.