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LATEST NEWS UPDATES | No plan to raise prices of diesel, LPG or kerosene for now: Jaipal Reddy

No plan to raise prices of diesel, LPG or kerosene for now: Jaipal Reddy

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published Published on May 28, 2012   modified Modified on May 28, 2012
-The Economic Times

The government has no immediate plans to raise the retail prices of diesel, kerosene and cooking gas, Oil Minister S. Jaipal Reddy said on Monday.

"I am not touching (the prices of) diesel, LPG (liquefied petroleum gas) or kerosene," Reddy said, adding, no date has yet been fixed for a meeting of a ministerial panel to review the prices of the three subsidised fuels.

State-owned oil fuel retailers announced an 11 per cent hike last week after a six-month freeze on rises, seeking to recover losses from higher global oil prices and a plunging rupee that have deepened the country's trade deficit.

Reddy said his ministry has recommended raising the factory gate tax on diesel-driven vehicles to curb the growing consumption of the fuel, currently sold at substantially cheaper prices than petrol.

Government's hefty subsidy bill for diesel, kerosene and LPG is a budget-buster that forces heavy government borrowing and weighs on investor sentiment.

High global energy prices and a declining rupee, meanwhile, exacerbate the current account deficit in a country that imports 80 percent of its oil. Oil companies lose about Rs 14 ($0.25) per litre on diesel, which is much more widely used than petrol.

Last week, Reddy ruled out an immediate rollback in petrol prices, saying economic decisions could not be solely guided by public sentiment.

But he kept open the possibility of a reduction if crude prices declined, saying the decision would be reviewed in a few days. Reddy said the oil ministry also wanted the empowered group of ministers (EGoM) on fuel prices to meet soon to decide on raising diesel, kerosene and cooking gas rates.

Reddy, who was abroad when oil companies raised petrol prices by Rs. 7.5 per litre - a decision most economists support, but one that has drawn near-hysterical opposition from political parties, hoped the Centre and states would reduce taxes on petrol.

The Economic Times, 28 May, 2012, http://economictimes.indiatimes.com/news/economy/policy/no-plan-to-raise-prices-of-diesel-lpg-or-kerosene-for-now-jaipal-reddy/articleshow/13594836.cms


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