Parikh panel recommends Rs 4-5/l immediate hike in diesel rate
Oct 28 2013 , New Delhi
The expert group, which was tasked to suggest a methodology for pricing of diesel and cooking fuel, will submit its report on Wednesday.
Sources said the committee has suggested that trade parity pricing formula for diesel, kerosene and cooking gas (LPG) be retained.
It suggested an increase in its retail price by Rs 4-5 per litre immediately and the remaining subsidy recovered from consumers through a monthly price hike of Re 1 per litre or oil companies be paid a fixed subsidy of Rs 6 per litre.
The government is looking to alter the way diesel and cooking fuels are priced to reduce its subsidy burden, which appears to be spiralling out of hand.
Since the last fiscal, the Finance Ministry has pushed for refiners to be paid the equivalent of rates they would have realised if diesel, kerosene and LPG were exported.
A departure from the import parity price (import price plus duties and transportation) mechanism would have shaved off Rs 17,618 crore from last fiscal's Rs 1,61,029 crore subsidy bill.
Sources said the panel has declined the Finance Ministry's demand for doing away with import parity pricing of diesel, kerosene and LPG.
The committee favoured partial increase in kerosene and LPG rates and moving towards market-determined prices in two to three years.