Millennium Post

Panel favours Rs 5 hike in diesel prices

A government panel recommended that India immediately raise diesel prices by about 9.5 per cent or 5 rupees a litre and take other measures to cut a huge oil subsidy bill, but its suggestions may prove tough to follow.

The panel, set up in May to advise the government on fuel pricing, also suggested capping the subsidy on diesel sales at 6 rupees a litre, oil minister S Veerappa Moily told a news conference on Wednesday. India, the world’s fourth-largest oil importer, needs to rein in spending to help stabilize its finances and support the rupee, which hit a record low earlier this year.

The 5 rupee diesel price hike could cut the annual subsidy bill by Rs 400 billion, said Kirit Parikh, the head of the government panel that submitted the report.  Diesel accounts for over 40 per cent of India’s refined fuel use.
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