NEW DELHI, Sept 13 An Indian cabinet panel
headed by Prime Minister Manmohan Singh may discuss raising the
prices of heavily subsidised fuels including diesel at a meeting
on Thursday and could take a decision, government officials told
New Delhi subsidises the prices of diesel, cooking gas and
kerosene to dampen inflation and protect the poor, a popular
policy that has nevertheless put a severe strain on public
While the issue is not on the committee's agenda, it will
likely be discussed, three officials said. The meeting of the
Cabinet Committee on Political Affairs is due to take place at
6:30 p.m. (1300 GMT).
A meeting of the full cabinet is scheduled for Friday, where
other ways of reviving the economy are to be discussed,
including a proposal to allow foreign airlines to invest in
The rising bill from the fuel subsidy and the resulting
strain on public finances have put India's investment grade
credit rating in peril.
However, fears of a political backlash mean pump prices have
remained unchanged for more than a year. A price increase will
almost certainly trigger street and political protests ahead of
The government acknowledges a price hike is essential for
curbing the fiscal deficit, a pre-condition for reviving growth
in Asia's third largest economy.
A price increase will also aggravate inflation, as costs,
such as road freight rates, will rise.
Analysts estimate a 5 rupee increase in diesel prices, which
now stand at 40.91 rupees per litre, will add 0.5-0.8 percentage
points to headline wholesale price inflation, currently a little
below 7 percent.
($=55.44 Indian rupees)
(Reporting by Rajesh Kumar Singh, Manoj Kumar and Nigam Prusty;
Editing by Ron Popeski)