The Hindu : Front Page : Rangarajan panel for increase in LPG prices

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Saturday, Feb 18, 2006

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Rangarajan panel for increase in LPG prices

Special Correspondent

Suggests that kerosene subsidy be restricted to below poverty line families

NEW DELHI: The Rangarajan Committee on pricing and taxation of petroleum products has proposed a steep hike in LPG prices along with a rise of Rs. 1.21 per litre increase in petrol and Rs. 1.96 per litre in diesel prices. Calling for a shift from the existing import parity system to a trade parity model, it has also suggested cutting customs duties on petrol and diesel from 10 to 7.5 per cent and shifting excise duty from ad valorem levies to specific rates.

The committee, which submitted its final report to Petroleum Minister Murli Deora here on Friday, suggested restricting the sale of subsidised kerosene to below poverty line (BPL) families. "While the committee acknowledged the need for subsidising kerosene, it called for the subsidy to be restricted to poor families only," the report said.

Mr. Deora, however, gave a clear indication that kerosene and LPG prices were not likely to be increased, as there was definite political consensus that these products should be spared as they were used by the weaker sections. He said all political parties, including the ruling Congress and its allies, were against any hike in prices. "It will be my endeavour that the common man continues to be able to get household fuels like kerosene and LPG at affordable rates."

He declined to answer any other question on the report, saying the Government would have to study it before any decisions are taken.

The committee suggested raising the LPG price by Rs. 75 per cylinder immediately and quarterly increases till the Rs. 148 per cylinder gap between the current retail selling price and the production cost was eliminated. It favoured hiking the kerosene price by Rs. 10 a litre in the medium term and giving a Rs. 9 per litre subsidy dole directly to poor families as coupons or vouchers. On excise duty, it proposed shifting from the current mix of specific and ad valorem levies to pure specific levy of Rs. 5 per litre on diesel and Rs. 14.75 per litre on petrol.

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