Putting speculations at rest, the government on Wednesday said it is not considering raising prices of LPG and kerosene.
"There is no such proposal in the government. We are not even thinking on that line," Oil Minister Dharmendra Pradhan said when asked if the government was considering raising prices of cooking gas by Rs 5 per cylinder and kerosene by Re 1 per litre on a monthly basis.
He was talking to reporters in New Delhi after the Cabinet meeting.
Speculation was rife that the government might raise prices of cooking gas (LPG) and kerosene aimed at wiping out the Rs 80,000 crore subsidy on the two fuels.
Subsidy on LPG currently is a staggering Rs 432.71 per 14.2-kg cylinder and at Rs 5 per month increase it will take 7 years to wipe out the subsidy.
On kerosene, the subsidy currently is Rs 32.87 per litre and at a hike of Re 1 per month, it would take more than two-and-a-half years to wipe out the subsidy.
Fuel subsidy is the biggest drain on the exchequer. In the current fiscal, subsidy on diesel, LPG and kerosene is estimated at Rs 115,548 crore. Of this, LPG accounts for Rs 50,324 crore and kerosene Rs 29,488 crore.
In 2013-14, the government paid Rs 70,772 crore in cash subsidy while upstream firms shelled out Rs 67,021 crore. In the previous year, the government payout was Rs 100,000 crore and upstream contribution was Rs 60,000 crore.