Govt open to more fuel subsidy

Finance Minister Pranab Mukherjee has suggested that the government was open to increasing the fuel subsidy beyond the budgeted level, if needed.

The statement is likely to provide comfort to oil marketing companies which are saddled with mounting losses due to their inability to align the retail prices of diesel, cooking gas and kerosene oil to global prices. Oil companies are losing nearly Rs 18 on every litre of diesel that they sell, while the loss on selling cooking gas is over Rs 300 a cylinder. Although a duty cut is virtually ruled out, oil marketing companies are expected to be allowed to increase retail prices marginally and the government might have to bear a higher subsidy burden to cushion what were the most profitable companies in the country until the policy flip flop on oil subsidy emerged during the current government.