Chaturvedi Panel which was established by Prime Minister to understand financial position of oil firms and give recommendations has suggested for sharp increase in petrol, and diesel products. In its recommendation the commission has asked for hike in petrol prices by Rs 2.50 a litre per month till March 2009 and diesel prices by Rs 0.75 per litre till 2010 to eliminate subsidies.

 

Another recommendation that has come from the panel is that import duty on petrol and diesel should be slashed to zero-from 2.5 per cent, as has been done in the case of crude oil, domestic kerosene and LPG. Similarly, excise duty on petrol should be reduced from Rs 13.75 per litre to Rs 10. However, these are just recommendations and government has not yet decided to implement them.

 

As of now, under existing system Indian Oil, Bharat Petroleum and Hindustan Petroleum are compensated for losses on sale of petrol, diesel, domestic LPG and kerosene via various subsidies in the form of Government bonds and discounts from upstream firms like ONGC. Government has long been thinking of getting away with losses in oil import, and so the panel was set to study it.