By Prasanta Sahu
NEW DELHI--India is considering a plan to increase diesel and kerosene prices in phases to lower the government's fuel-subsidy expenses, a senior oil ministry official said Thursday.
The government is looking at increasing the price of diesel by 10 rupees over 10 months, or by 1.0 rupee every month, and that of kerosene by a similar amount in two years, the official, who didn't wish to be named, told reporters.
India's state-run fuel retailers--Indian Oil Corp. (530965.BY), Bharat Petroleum Corp. (500547.BY) and Hindustan Petroleum Corp. (500104.BY)--are required to sell diesel, kerosene and cooking gas at government-set discounted prices. The government compensates part of their losses due to selling these fuel products below cost.
According to government data, the three state-run companies are losing 9.28 rupees on every liter of diesel and 31 rupees on every liter of kerosene they sell.
New Delhi last raised diesel prices in September, when it also restricted the supply of subsidized cooking gas.
Prime Minister Manmohan Thursday said energy was underpriced in India and that there was a need for "some phased price adjustment."
India's government runs a huge budget deficit--projected to be 5.3% of gross domestic product in the current fiscal year through March--mainly because of its expenses toward fuel, food and fertilizer subsidies.
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