NEW DELHI (Reuters) - A ministerial panel is to decide on hiking fuel prices next week, local media reported on Sunday, a day after state-run oil firms raised petrol prices by a record amount as the government risks fuelling high inflation as it battles to bolster public finances.
The group of ministers tasked with discussing a rise in diesel, LPG and kerosene prices had previously postponed its meeting as the government looked to defer a decision until after the results of recent state elections.
“A decision will be taken on raising prices of these items when the (panel) meets next week,” Finance Minister Pranab Mukherjee, who chairs the panel, told reporters.
State-run oil firms raised petrol prices by 5 rupees a litre at midnight on Saturday, two days after the ruling Congress party-led coalition survived a major voter backlash in five state elections.
Last June, the government allowed state-run oil firms to fix the price of petrol but continued to control the prices of diesel, kerosene and cooking gas to protect the poor and try to tame inflation.
Headline inflation in India stands at just under 9 percent. Asian rival China last month raised gasoline and diesel prices by about 5 percent.
One oil ministry source said last week the government could consider raising diesel prices by more than 4 rupees a litre, the steepest hike in about a decade, to counter the impact of high global crude prices.
Even a small rise would help limit the government’s fuel subsidy burden to a budgeted $5.2 billion for 2011/12 and help it meet its fiscal deficit target of 4.6 percent.
Reporting by Henry Foy; Editing by David Holmes