In the first official admission that a fuel price hike was underway soon, Union petroleum minister Veerappa Moily on Friday said the government will take a decision on raising diesel and cooking fuel prices along with increasing number of subsidised LPG cylinders for households "as quickly as possible".
The ruling UPA's political leadership is holding consultations on options such as raising diesel and LPG prices to cut an unprecedented Rs 1,60,000 crore revenue loss expected from selling auto and cooking fuel below cost this fiscal.
Government sources told HT that the fuel price hike was also discussed at the Congress' core committee meeting held late on Friday evening.
While no official confirmation could be sought, sources said Moily - who is not part of the core panel - was at the meeting to share the details of the proposed hike.
"As the model code of conduct is in place due to assembly elections in three north-eastern states, the government will first have to take permission of the Election Commission over this," the source added.
The ministry's proposal is based on recommendation of the finance ministry-appointed Vijay Kelkar committee, which was appointed to suggest a roadmap for fiscal consolidation.
Sources said since the finance ministry has refused to bear additional subsidy - arising from raising supply of subsidised cooking gas cylinders for households - the oil ministry has proposed to make up for the shortfall by raising prices.
It has proposed to raise LPG rates by Rs 130 per 14.2-kg cylinder in two installments to make up for 1/5th of the nearly Rs 500 per bottle loss being incurred currently.
On diesel, it has proposed Rs 4.50 per litre hike in one go or in monthly installments of Rs 1.50 per litre.