The petroleum ministry has sought a Rs 10 per litre increase in petrol and Rs 5 a litre hike in diesel prices, along with a cut in customs and excise duties, to offset the impact of surge in crude oil prices that have touched $135 per barrel.
"The situation is getting to be alarming. We need to stem the rot at the beginning," petroleum secretary M S Srinivasan told reporters after a stock-taking meeting with the heads of public sector oil companies.
Srinivasan, however, said the Cabinet meeting scheduled for Friday will not consider raising fuel prices as the subject needed some more preparation and a note would be moved to the authorities in a day or two.
"We expect a decision in 3-4 days time," he said, adding that the ministry was suggesting a combination of price hike and duty cut to lower the projected Rs 2,00,000 crore (Rs 2,000 billion) under-realisation on sale of petrol, diesel, LPG and kerosene.
"The price hike is inevitable," he said, but refused to say what quantum of hike the ministry was seeking.
Srinivasan said the ministry was seeking a lowering of customs duty on crude from 5 per cent to zero and import duty on petrol and diesel from 7.5 per cent to 2.5 per cent.
Besides, the ministry was also seeking cut on excise duty on the two products.
Petroleum Minister Murli Deora said he had discussed the situation with the Prime Minister Manmohan Singh on Thursday evening and will raise the issue again on Friday to seek and early meeting of the Cabinet.
"We are trying to see that some action is taken immediately," Deora said.
