KIRIT PARIKH COMMITTEE ON FUEL PRICING

Diesel prices should be immediately raised by Rs 4-5 a litre, the Kirit Parikh Committee has recommended, while favouring continuation of the existing pricing principles for controlled petroleum products.

The expert group, tasked to suggest a methodology for pricing of diesel and cooking fuel, will give its report on Wednesday.

Sources said the committee has suggested the trade parity pricing formula for diesel, kerosene and cooking gas (LPG) be retained.

It suggested an increase in diesel’s retail price by Rs 4-5 a litre immediately and the remaining subsidy recovered from consumers through a monthly price increase of Rs 1 a litre or oil companies be paid a fixed subsidy of Rs 6 a litre.

RECOMENDATIONS

The committee has suggested that trade parity pricing formula for diesel, kerosene and LPG be retained Recommends recovery of the remaining subsidy through a monthly price increase of Re 1 a litre Instead of the above oil companies could be paid a fixed subsidy of Rs 6 a litre The committee favours partial increase rates and moving towards market-determined prices in two to three years Stiff riders for spectrum-sharing; delinking spectrum from service usage mooted Stiff riders for spectrum-sharing; delinking spectrum from service usage mooted

The government is looking to alter the way diesel and cooking fuels are priced to reduce its subsidy burden, which appears to be spiralling out of hand.

Since the last financial year, the finance ministry has pushed for refiners to be paid the equivalent of rates they would have realised if diesel, kerosene and LPG were exported. A departure from the import parity price (import price plus duties and transportation) mechanism would have shaved off Rs 17,618 crore from last financial year’s  Rs 1,61,029-crore subsidy bill.