The Kelkar Committee held fuel subsidies responsible for major fiscal slippage in recent years, and advised the government to nil subsidies to stem the dwindling finances.

The Kelkar Committee, which was set up by Finance minister P Chidambaram to recommend fiscal consolidation roadmap, submitted its report on Friday.

The Committee blamed subsidy of diesel for a major part of fiscal deficit, and suggest that that it should be eliminated by the next financial year.

Calling on the government to zero subsidy on diesel, the report said, "Our policy objective should, at least, aim to eliminate half of the diesel per unit subsidy during by March 31, 2012, and the remaining half over the next fiscal."

In case the finance ministry accepts the recommendation on the diesel front, prices of diesel will jump by another Rs 6.25 per litre this year, before making another huge jump in the next fiscal year.

On the LPG front, the Committee recommended a 25 per cent cut in subsidy in the current fiscal year, and the remaining 75 per cent in the coming two years. As far as kerosene is concerned, the Committee recommended that the ongoing subsidy should be cut by 33 per cent by 2014-15.

The fiscal deficit for the current year is expected to soar to 6.1 per cent as compared with the government's estimate of 5.1 per cent.