New Delhi: The steep Rs 5 per litre diesel price hike sought earlier to foot the heavy import bill may not be required due to the recovery in the rupee, the Oil Ministry sources told CNBC-TV18's Nayantara Rai. Instead, the ministry is likely to seek a one-time Rs 3-4 per litre price hike.
Sources say political compulsions may not allow Rs 5 per litre diesel price hike. Fuel price rises generally provoke stiff resistance from the Opposition parties, and any increase now is expected to draw a bigger protest as India approaches a General Election. The election must be held by May 2014.
Diesel accounts for more than 40 per cent of fuel demand, or about 1.4 million barrels per day (bpd), and the bulk of that is used by trucks, farmers and industry, which needs back-up generators to cope with frequent power blackouts.
The ministry is likely to seek 90 paise per litre monthly diesel price hike from FY15. It is also seeking a hike in LPG prices by around Rs 25-50 per cylinder, while for kerosene, it is looking for a Rs 1-2 per liter price hike if politically feasible.
On August 31, petrol price was hiked by a steep Rs 2.35 per litre, the sixth increase in rates in three months, and diesel by 50 paise per litre on falling rupee and firming international oil prices. Sources say the oil ministry has informed the Prime Minister and the Finance Minister on the state of under-recoveries.
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