The government is hoping to substantially negate the political fallout of higher diesel and cooking gas (subsidised LPG cylinder) prices by doubling the cap on the number of subsidised LPG cylinders from six to 12 a year. A proposal to this effect has  been readied for a final decision by the Cabinet, a senior government official confirmed to HT. Such a move will “substantially mollify” people who are upset with rising fuel prices and the six-cylinders-a-year cap on subsidised LPG cylinders.

“The cap may be raised to 12 against the anticipated nine LPG cylinders per year,” the source said, adding that some Congress leaders are also pressing for a phased increase in fuel prices instead of a one-time steep hike.

The Cabinet note has proposed to hike diesel and subsidised LPG prices by Rs. 4.50 per litre and Rs. 130 per cylinder, respectively, by March this year.

Thereafter, the plan is to hike diesel prices by 60 paise to Rs. 1.50 per litre per month for four to nine months to eliminate the entire diesel subsidy and raise the LPG price by Rs. 50 per quarter for seven to eight quarters to bring the subsidy down to zero.

The exact time schedule for the phased elimination of subsidies will depend on the international price of crude. The three state-owned oil companies are currently losing about Rs. 10 per litre on diesel and Rs. 500 on every subsidised LPG cylinder.