An increase in the prices of domestic liquefied petroleum gas (LPG) and kerosene sold through the public distribution system (PDS) is on the anvil. The increase in prices could come within a month.
The price increase has become imminent because of the spurt in the global crude prices. The subsidy bill on these two commodities is expected to rise from the budgeted Rs 4,495 crore to Rs 6,000 crore by the end of 2002-03, in case their domestic prices remain unchanged.
It has been decided that a part of the Rs 1,500-crore gap will be met by raising the retail prices of the two products, and the rest through grant of subsidy from the Consolidated Fund of India.
The petroleum and the finance ministries are working out a mechanism for setting subsidy on these two politically sensitive petroleum products on a specified flat rate basis. The mechanism was likely to be finalised within a fortnight, petroleum secretary B K Chaturvedi told reporters yesterday. However, the price revision can come only after the mechanism is finalised.
While the petroleum ministry says subsidy on domestic LPG is around Rs 75-85 a cylinder, the finance ministry feels it is Rs 90 a cylinder. The two ministries will have to arrive at a consensus on the quantum of subsidy and the level to which it has to be reduced before asking oil companies to raise prices.
Domestic LPG and PDS kerosene prices were last revised in the Union Budget, when they were raised by Rs 40 a cylinder and Rs 1.50 a litre, respectively.
But LPG prices were later reduced by Rs 20 a cylinder under immense political pressure from both within the ruling alliance and the Opposition.
