Govt sets terms for diesel price hikes - source

NEW DELHI Thu Jan 17, 2013 8:12pm IST

Employees manually fill containers with diesel during a power cut at a fuel station in New Delhi July 31, 2012. REUTERS/Adnan Abidi/Files

Employees manually fill containers with diesel during a power cut at a fuel station in New Delhi July 31, 2012.

Credit: Reuters/Adnan Abidi/Files

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NEW DELHI (Reuters) - The government has told state fuel retailers to raise diesel prices by 0.40 rupees to 0.50 rupees a litre every month to gradually align them with market rates, a source privy to the development said on Friday.

The increase excludes value added tax and other taxes in various states.

The government has also told fuel retailers to sell diesel, which accounts for 40 percent of fuel consumption in the country, at free market rates to bulk consumers such as industrial clients, the source, who requested anonymity, said.

India earlier on Thursday had given fuel retailers some leeway to raise prices of diesel, which is heavily subsidised by New Delhi.

(Reporting by Nidhi Verma; Editing by Jo Winterbottom)

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