At a time when the government is struggling to meet its fiscal deficit target, the Petroleum Ministry has proposed to increase the cap on supply of subsidised cooking gas (LPG) cylinders to nine per household in a year from current limit of six, sources told NDTV.
The proposal comes barely a week after Petroleum Minister Veerappa Moily said the government was considering raising the cap.
The ministry has also proposed a hike of Rs 100 in the cost of each additional LPG cylinder, they added. The proposal will be taken by the Cabinet Committee on Economic Affairs later.
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.
The hike in supply of subsidised cylinders would lead to an additional Rs 9,000 crore of subsidy payout 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.
Subsidised LPG currently costs Rs. 410.50 per 14.2-kg cylinder and any household requirement beyond current cap of 6 cylinders is to be bought at near market price of Rs. 895.50 per cylinder.
Government sources also said 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.
State-owned fuel retailers are likely to end the fiscal year with a revenue loss of over Rs. 155,313 crore on sale of diesel, domestic cooking gas (LPG) and kerosene at government-controlled rates that are way lower than cost.
With inputs from PTI