Media reports suggest that the Cabinet Committee on Economic Affairs would decide on the proposal of the oil ministry to raise the cap on supply of subsidised cooking gas (LPG) cylinders per household per year to nine.
In September 2012, the government limited the subsidised LPG cylinders per household per year to six. This means that the household will have to pay the market rate to buy cylinders over and above six.
If the government raises the cap, state-owned oil marketing companies (OMCs) may incur an additional under-recovery of Rs 9,000 crore over and above the Rs 155,313 crore that the government is currently having to deal with on sale of diesel, LPG and kerosene at below market price.
The oil ministry is also said to have proposed a hike of Rs 100 in the cost of each additional LPG cylinder. This is in line with the recommendations of the Kelkar committee, which had suggested an immediate hike in fuel prices, including LPG, and complete deregulation of diesel prices by start of the 2014-15 fiscal year.
It is learnt that the Kelkar Committee recommendation on phased increase in diesel prices is under consideration and the government is yet to take a final view on this issue.
The committee had recommended an immediate hike in price of diesel by Rs 4 per litre, of kerosene by Rs 2 a litre and of LPG by Rs. 50 per cylinder.
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