The core group of the UPA government on Friday evening reviewed the options available to tackle the spurt in global crude prices, but it was not immediately clear if the group cleared a price hike to be taken by the Cabinet on Saturday.
Prime Minister Manmohan Singh, UPA Chairperson Sonia Gandhi, External Affairs Minister Pranab Mukherjee, Defence Minister AK Antony, Home Minister Shivraj Patil, Finance Minister P Chidambaram and Petroleum Minister Murli Deora deliberated over options for nearly two hours on Friday evening. None of them commented on the issue.
However, options that are believed to have been discussed are of raising petrol price by Rs 3, 4, 5 or 7 a litre and diesel by Rs 1, 2, 3 and 4 per litre. Besides, a Rs 20 per cylinder hike in domestic LPG price may also be proposed.
"In all probability, petrol price may be raised by Rs 3 a litre, diesel by Rs 2 and domestic LPG by Rs 20," a source said.
Prime Minister Manmohan Singh had multiple brainstorming sessions with Finance Minister P Chidambaram, Oil Minister Murli Deora, Planning Commission Deputy Chairman Montek Singh Ahluwalia and External Affairs Minister Pranab Mukherjee on ways to curtail the projected Rs 225,000 crore revenue loss on sale of petrol, diesel, domestic LPG and kerosene this fiscal. UPA Chairperson Sonia Gandhi was also consulted on Thursday.
Besides price rise, customs duty on petrol and diesel may be cut from current levels of 7.5 per cent, and at least Re one a litre reduction in excise duty on the two is also on cards.
A one rupee hike in petrol and diesel price would give Indian Oil, Bharat Petroleum and Hindustan Petroleum Rs 1,036 crore and Rs 4,575 crore additional revenues on the two fuels respectively during the remaining 10 months of the fiscal. The Rs 20 hike in LPG prices would yield Rs 1,200-1,300 crore.
A one rupee cut in excise on petrol would result in revenue loss of Rs 1,380 crore to the government and a similar reduction on diesel would decrease revenues by Rs 5,270 crore.