In a path-breaking report, an expert group headed by Kirit Parikh on Wednesday suggested freeing of petrol and diesel prices and raising LPG rates by Rs 100 per cylinder and kerosene by Rs 6 per litre.
"Current petroleum product pricing policy of the government is not sustainable," Parikh said after submitting the report to Petroleum Minister Murli Deora.
Freeing petrol and diesel prices would result in an increase of Rs 3 per litre in petrol prices and Rs 3-4 in diesel prices.
At present, the government does not allow state-running fuel retailers to fix petrol, diesel, kerosene and LPG prices in line with international cost, resulting in huge revenue losses for the companies and subsidy burden on government.
Parikh said petrol and diesel pricing should be left to the competitive market process, while government should continue to subsidise PDS kerosene and domestic LPG to some extent.
Deora said that the report will be processed and will be put in before the government or the Cabinet in a week.