No proposal to increase diesel prices as of now: M Veerappa Moily

NEW DELHI: Oil Minister Veerappa Moily has ruled out any sharp increase in diesel prices in the near future. “As of now there is no proposal to raise prices,” Moily told reporters after announcing the launch of a mega fuel conservation campaign to cut country’s rising fuel subsidy bill.

Moily said the rising fuel subsidy burden was a “major concern” but diesel price hike would be “calibrated” between 45-50 paise per litre every month.

Moily said revenue losses of state oil marketing companies on diesel have jumped to Rs 14.50 a litre mainly because of depreciation of the rupee. “We are concerned about the under-recoveries (revenue losses). We are working on other alternatives to reduce the under-recoveries,” he said.

Moily, however hinted that the proposal is deferred and not shelved. “If you ask me today, there is no proposal. But we live in a dynamic environment,” he said.

ET wrote on Monday that the government had developed cold feet about the proposal to increase diesel prices sharply and raise them every week as top Congress leaders and the party's allies were worried about the political fallout of such a move ahead of the festive season and elections in five states.

Moily had sent a proposal to reduce India’s subsidy bill by $20 billion to the Prime Minister last month that included a shift from the monthly increase in diesel price by 50 paise to weekly price revisions and a one-time hike in diesel rate by Rs 5 a litre. The government is worried about the impact of raising prices before crucial assembly elections in Delhi, Rajasthan, Madhya Pradesh, Chhattisgarh and Mizoram. The Election Commission is likely to announce the poll schedule soon.