Prices deal double whammy

Oil to cost Re 1 more.

A modest increase of around Re 1 a litre in the prices of petrol and diesel looks imminent.

The Congress-led government at the Centre is lobbying hard to convince its key allies to the inevitability of a hike in the prices of the two auto fuels in view of the spurt in the international prices of crude.

This, along with the proposal to increase subsidy on cooking gas and kerosene and extending the scheme beyond the current financial year, are expected to be discussed at a Cabinet meeting here tomorrow, sources said.

While most of constituents are learnt to have given their approval to the hike, members the Left Front, which is supporting the government from outside, is understood to have suggested only a slight increase in petrol and diesel prices, to ensure that the consumer is not badly hit.

The efforts to hammer out an "acceptable" formula for the price-hike were stepped up today with Prime Minister Manmohan Singh discussing the issue with Finance Minister P Chidambaram and Petroleum Minister Mani Shankar Aiyar.

Before arriving at the price-revision, officials of the two ministries will reconcile the impact of measures like a cut in Customs and excise duties on crude and products, and increasing subsidies on cooking gas and kerosene.

It is learnt that the finance ministry is resisting slashing of duties, without which petrol prices in Delhi will have to be raised by Rs 3.53 a litre, and diesel prices, by Rs 2.25 a litre.