Prime Minister Manmohan Singh on Tuesday informed that diesel prices will also be untied from government control as a part of much needed reform in the sector. However, he said that LPG and kerosene will be subsidized in future also.
Further, he didn't accept the Opposition criticism over the decision taken by the government's in the last week to increase fuel prices, which resulted in bringing petrol prices at par with market rate.
He said to the journalists who were with him while returning from Toronto after attending G-20 summit that diesel prices will also follow petrol's and will be deregulated as it is much needed to tackle the prevailing situation.
The government on June 25 had decided to deregulate the petrol prices, which resulted in a hike of Rs 3.50 a liter in rates in Delhi. Besides this, government also increased diesel prices by Rs 2 a liter with an intention to gradually deregulate it.
The Prime Minister didn't disclosed when government would deregulate diesel prices, but said that government will continue to control the prices of domestic cooking gas LPG and kerosene.
If diesel prices are decontrolled by the government it is expected to rise by additional Rs. 1.5.
As a result of last week's price rise LPG prices surged by Rs. 35 per cylinder and kerosene rates inclined by Rs. 3 per liter, which observed a first rise in price in more than 8 years. This hike was done to diminish government's subsidy bill.
In spite of the price hke, kerosene is being sold at Rs 15.07 per liter which is below cost, whereas a 14.2-kg LPG cylinder is priced less by Rs 226.90.
He further added that the adjustment made in the prices of kerosene and LPG was also very much needed taking into consideration the very high amount of subsidy that is hidden in their pricing structure.
The Prime Minister was answering a query regarding the government's decision to hike the prices of petroleum products to decrease losses for oil marketing companies, which signaled towards the government's, preparation for tougher reforms and further deregulations.