After the recent steep hike in diesel prices by Rs. 5 per litre, there are strong indications that diesel prices may again be hiked by a similar amount in the next six months.
Aiming at a complete deregulation of diesel prices by the government, the Kelkar committee report has recommended elimination of half of the subsidy on per litre of diesel by March 31, 2013 and the remaining half over the next fiscal year.
If implemented, this would mean,that 50% the losses of R16-17 on every litre of diesel - as projected by oil companies before the recent hike in prices - are passed on to consumers in this fiscal year itself. As a hike of Rs. 5 a litre has already been implemented, another Rs. 3-4 a litre hike in prices before March 31, 2013 could come your way.
According to the committee, subsidy on diesel has been a major contributor to fiscal slippage in recent years. "Although diesel prices have been deregulated in-principle, prices are still being administered by the government," the report said.
If, at this stage, diesel prices are not fully deregulated, there is an urgent need for an immediate price increase, it added.
The panel also proposed an increase in kerosene prices by Rs. 2 per litre and of LPG by Rs. 50 per cylinder. It also said that the government should look at eliminating the LPG subsidy by 2014-15 and reducing kerosene subsidy by 2014-15.