Diesel prices may go up by Rs. 10 a litre in the next 10 months, while kerosene will be dearer by the same amount over a two-year period, if the government accepts a petroleum ministry proposal. An official said on Thursday the ministry would seek an increase of Rs. 1 a month in diesel prices, which were raised last time by Rs. 5 a litre in September. Diesel costs Rs. 47.15 a litre, while kerosene, untouched since June last year, costs Rs. 14.79 in Delhi.

“We are left with no choices,” the official said on the sidelines of Thursday’s NDC meeting where the PM called for aligning domestic prices with global rates.

“Energy is underpriced in our country,” Singh said, arguing the need for checking the mounting subsidy bill.

He said, “Immediate adjustment of prices to close the gap is not feasible. I realise this, but some phased price adjustment is necessary.”

The oil ministry’s proposal to hike diesel prices follows the recommendations of a committee headed by former finance secretary Vijay Kelkar.
“The losses (due to subsidies) have reached unsustainable levels,” the petroleum ministry official said.

Oil companies have been selling diesel and kerosene at prices much below costs despite hikes in global crude prices and a persistently weak rupee pushing up the import costs further.