Diesel prices may have to be raised by Rs 10 per litre over the next one year, and kerosene rates by same quantum over the next two years, if government accepts recommendations of Vijay Kelkar Committee.

The committee, which was appointed by Finance Ministry to formulate the fiscal consolidation roadmap, had in its report suggested raising diesel and kerosene rates to cut the Rs 1,63,000 crore fuel subsidy bill.

An Oil Ministry spokesperson said the report of the panel was with the government and no view on raising diesel or kerosene prices has been taken yet.

The ministry, he said, has “not moved any proposal or considering any increase” in rates at this point of time.

The Kelkar Committee had recommended that diesel prices should be raised in staggered manner over one year period to wipe out Rs 9.28 per litre loss on fuel sale. On kerosene, it had suggested raising rates by Rs 10 per litre over two-years.

Price of diesel, which currently costs Rs 47.15 per litre in Delhi, was last revised on September 14 when it was hiked by a steep Rs 5.63 per litre. Kerosene rates have not changed since June last year and costs Rs 14.79 per litre in Delhi.

“There is a need to rationalise prices. The losses have reached an unsustainable levels,” a ministry official said.

Oil firms currently lose Rs 30.93 per litre on kerosene.

Price hike along with promoting the use of LPG and natural gas will help cut kerosene consumption by 20 per cent, he said.

While government is likely to raise soon the number of subsidised cooking gas (LPG) from 6 to 9 cylinder of 14.2-kg per household annually, the ministry wanted to have just two rates for the fuel -- a subsidised price and a market rate, instead of four rates presently, he said.

Subsidised LPG costs Rs 410.50 per 14.2-kg cylinder and any household requirement beyond current cap of 6 cylinders is to be bought at near market price of Rs 895.50 per bottle. For non-domestic use, a 14.2-kg LPG cylinder costs Rs 1,156 while a 19-kg cylinder for commercial use is priced at Rs 1,619.