Brace yourself for more trouble for your wallet as petrol and diesel prices are to rise steadily as the government has decided to reduce subsidies. At least one big dose of a fuel price hike is likely soon.
Implying frequent price hikes starting next year, a blueprint isbeing readied to completely abolish subsidies on auto fuels in the budget 2013-14 next month. After deregulation of petrol prices, Chidambaram is keen on decontrolling diesel prices as well. Additionally, the ministry has a roadmap for a phased reduction of subsidy on LPG (cooking gas) and kerosene. The government plans to reduce the fuel subsidy outgo to one-third on kerosene and to half on LPG by 2014-15
Although the government compensates oil companies for subsidising diesel, it still incurs a loss of Rs. 10 on every litre. The OMCs -- Indian Oil, Hindustan Petroleum and Bharat Petroleum have projected huge under-recoveries on petrol, LPG and kerosene at Rs. 411 Crore a day.