The Central Government should act quickly to raise diesel rates to bring them in line with global prices in order to reduce its subsidy bill, Prime Minister’s Economic Advisory Council Chairman C. Ranagarajan has said.

“I think we need to cut subsidies’ proportion of GDP... Therefore, there is an imperative need to reduce the diesel subsidies,” Dr. Rangarajan told PTI in an interview.

Finmin aims to make substantial savings in oil subsidy payouts

Alarmed by the R1.7-lakh-crore oil subsidy demand for this fiscal, the finance ministry has decided to revisit a suggestion made by expert committees in the past: Work out the subsidy entitlement of oil marketing companies (OMCs) according to 100% export-parity pricing of petroleum products. Under this system, the refinery-gate price of products — petrol, diesel, cooking gas and kerosene — due to OMCs will be arrived at as an average of export (FOB) prices of these product in select markets. The difference between the price realised by OMCs — they sell below cost in the subsidy regime — and the export price determined will be the “under-recoveries”, compensated through subsidy.

Diesel, kerosene and cooking gas LPG prices may be hiked soon as the government considers Vijay Kelkar committee recommendations on cutting fiscal deficit.

The Kelkar committee, which was appointed by the finance ministry to suggest a roadmap for fiscal consolidation, has suggested immediate hike in fuel prices and complete deregulation of diesel prices by start of fiscal 2014-15. It also suggested raising kerosene and LPG prices.

Diesel, kerosene and cooking gas prices could be raised soon while the government might separately take up a proposal to raise the cap on supply of subsidised LPG cylinders.

The government may take a look at raising the cap on supply of subsidised LPG cylinders to 9 per household in a year from current limit of six along with the Vijay Kelkar Committee recommendations to deregulate diesel prices by next year along with steep hike in cooking fuel rates.

The oil ministry has moved two separate cabinet notes - one to raise cap on supply of subsidised cooking gas cylinders and the other to increase fuel prices, particularly diesel, by less than a rupee per month to pair it with market rates and eventually deregulate it in next 15 months.

The ministry has also proposed to reduce one-third subsidy on kerosene by 2014-15 and on cooking gas by a quarter in this year, government officials said. According to oil ministry's recent data, state oil firms are losing Rs 9 a litre on diesel, Rs 30.60 on kerosene and Rs 490 per cylinder on cooking gas.
The proposals will substantially reduce government's subsidy burden on diesel, kerosene and liquefied petroleum gas (LPG), officials said. The estimated fuel subsidy for 2012-13 is about Rs 166,000 crore, out of which the finance ministry has sanctioned Rs 30,000 crore and released the first installment of Rs 10,000 crore to state oil marketing firms this week.

Hike being mulled as govt scrambles to find ways to meet Rs 1,60,000 cr deficit expected this fiscal on selling diesel, LPG and kerosene below production cost

Diesel prices may be hiked by Rs 10 per litre over a 10-month period and kerosene rates increased by same quantum over the next two years if a proposal being mulled in the Oil Ministry is accepted.

A British company has developed new ‘incredible’ light bulbs which are powered by gravity, for free distribution to communities in India and Africa who do not have reliable access to electricity.

Adding fuel to fire, people haven’t received subsidy

Mahipal Singh Yadav (31) is a contractual junior manager at the Kotkasim Gram Sewa Sahakari Samiti. Joining the cooperative, he had hoped, would be like any other job. However, since the direct cash transfer of kerosene subsidies scheme was piloted here, Mr. Yadav has found himself at the receiving end of people’s anger. The KGSSS operates five fair price shops (FPS) in the Kotkasim block. As the scheme came into effect, kerosene prices were hiked to Rs. 45 and then to Rs. 50 a litre from Rs. 15.

The government today informed Parliament that the process to implement direct transfer of cash subsidy on kerosene sold through public distribution system (PDS) has been initiated in 11 identified states and Union territories.

In written reply to a question in the Rajya Sabha, Minister of State for Finance Namo Narain Meena said, “The department of food and public distribution proposes to implement direct transfer of food subsidy to the targeted public distribution system beneficiaries in six Union territories (UTs) on a pilot basis.”