New Delhi, Jan. 4: The government may hike diesel, kerosene and cooking gas prices based on the recommendations of the Vijay Kelkar committee, which has laid out a road map to cut subsidies to contain the ballooning fiscal deficit.
"That (Vijay Kelkar committee's recommendation on deregulating diesel and raising kerosene and LPG rates) is a proposal. It is still at a proposal stage. The (petroleum) ministry is only processing that report and we are yet to take a decision," oil minister M. Veerappa Moily told reporters here.
Moily said the government was also considering raising the cap on the supply of subsidised cooking gas cylinders to nine per household in a year from six.
The Kelkar panel has suggested complete deregulation of diesel prices by the start of 2014-15, besides raising kerosene and LPG rates.
In September, the government had hiked diesel prices by Rs 5 a litre and introduced a quota of six subsidised LPG cylinders per year.
The hike in the supply of subsidised cylinders would lead to an additional Rs 9,000 crore of subsidy payout over and above the Rs 155,313 crore the government is bearing at present for selling diesel, LPG and kerosene below market prices.
Since the finance ministry is unwilling to foot this extra bill, it will have to raise fuel prices, officials said.
The government has allowed Cairn India to increase its output from the Rajasthan oilfields by up to 3 lakh barrels per day (bpd). The Barmer block in Rajasthan now produces 1.75 lakh bpd.
"We have cleared the exploration plan of Cairn and ONGC from 175,000 bpd to 300,000 bpd. This will add 15 per cent to the domestic production. The government has decided to allow exploration in mining lease areas," Moily said.