In order to bring the raising fuel prices at par with the production cost, the BK Chaturvedi panel has suggested that there should be monthly revision of prices at the rate of Rs 2.50 for petrol and 75 paise for diesel.

At present the major oil marketing companies - Indian Oil, Bharat Petroleum and Hindustan Petroleum - are selling petrol and diesel at a loss of Rs.11.60 a litre and Rs.23.23 a litre respectively. The recommendations of this report are yet to be made public.

The Committee, which was set up in early June this year to look into the financial health of oil PSUs by the Prime Minister also suggested  to subsidize the cooking fuels LPG and kerosene through a new tax on oil produced from fields awarded prior to the advent of New Exploration Licensing Policy (NELP) in 1999. The report also said that the up-stream oil companies like ONGC should no longer provide subsidies to down-stream companies.

It suggests that petrol and diesel be priced at a weighted average of import parity and trade parity, in a 80:20 ratio. Also, oil marketing companies should be allowed to fix their retail price, subject to an indicative selling. It is a scenario which will bring competitive pricing to the market. Any subsidies on these fuels should be given only to families living below the poverty line.

However, at present it seems that nobody is ready to implement the suggestions of this committee.

"We are studying the report and it will be premature to presume that the reported suggestions made by the Committee were being implemented. We have to do a thorough analysis before we even think of implementing them”, said the Petroleum Minister Murli Deora.

Many in the government think that raising fuel prices every month is unthinkable when inflation has crossed 12 per cent and elections are just nine months away.