The Cabinet Committee on Political Affairs (CCPA) meeting chaired by Prime Minister Dr. Manmohan Singh has also decided to restrict the supply of subsidized LPG cylinders to each consumer to six per year.
Government said that these hike will reduce the under-recovery of OMCs by about Rs. 20,300 crore and the under-recovery for 2012-13 will be about Rs. 1,67,000 crore which is more than the under-recovery of Rs. 1,38,541 crore incurred by OMCs during 2011-12.
The new prices will be affected from midnight today. The revised Retail Selling Price of Diesel in Delhi will be approximately Rs 47 per litre, however, branded Diesel will be sold at the market rate.
An official release says that the subsidized cylinders will continue to be available at 399 rupees per cylinder in Delhi , the market rate of LPG cylinders at non-subsidized rates will be notified by Oil Marketing Companies, OMCs on monthly basis.
The above decisions will reduce the under-recovery of OMCs by about 20,300 crore rupees and the under-recovery for 2012-13 will be about 1,67,000 crore rupees which is more than the under-recovery of 1,38,541 crore rupees incurred by OMCs during 2011-12.
Congress today said that the government has reluctantly taken the decision to increase the price of diesel. Party spokesperson Rashid Alvi said that the price of diesel and other petroleum products depends upon international market which are increasing.
Railway Minister and Trinamool Congress leader Mukul Roy has expressed his unhappiness over hike in diesel price.
Increase in price of Diesel by Rs. 5 per litre excluding VAT. Out of this, Rs. 1.50 per litre is on account of increase in Excise Duty. The balance increase of Rs. 3.50 per litre will reduce the under-recovery of OMCs by about Rs. 15,000 crore for the remaining part of the current financial year.
The government contended that the under-recovery on sale of Diesel during 2012-13, even after this price hike, is estimated to beabove Rs. 1,03,000 crore. The revised RSP of Diesel in Delhi will be approximately Rs 47 per litre. Further, branded Diesel will be sold at the market rate.
Restriction of the supply of subsidized LPG cylinders to each consumer to6cylinders (of 14.2 Kg) per annum. This will help in reducing the under-recovery by about Rs. 5,300 crore for the remaining part of the financial year. The under-recovery on sale of Domestic LPG during 2012-13, even after this measure, is estimated to be above Rs. 32,000 crore. Any number of cylinders will be available over and above the cap of 6 cylinders at market rate. The number of subsidized LPG cylinders available to each consumer in the remaining part of the current financial year will be 3 cylinders.While subsidized cylinders will continue to be available at Rs. 399 per cylinder (at Delhi), the market rate of LPG cylinders at non subsidized rates will be notified by the OMCs on monthly basis.
It may be recalled that the Department Related Parliamentary Standing Committee on Petroleum & Natural Gas (which has members from all Political Parties) made recommendation on capping of subsidized LPG cylinders to 6 per annum.
The effect of capping supply ofsubsidized LPG cylinders at six per annum will lead to saving of subsidy on one third of the total LPG cylinders.Two third of the total cylinders will still be supplied at subsidized rate. About 44% of the total Domestic LPG consumers, who consume 6 cylinders or less per annum, will not be affected by this decision. Capping of cylinders will also lead to reduction in misuse/diversion of subsidized cylinders.