Siam welcomes proposal to hike diesel prices

"Though the proposed price-hike of diesel is quite steep, but Siam would really support the rationalising of a price-hike," it said in a statement. The body, however, insisted that the rationalisation process had to be done in a manner that would not adversely affect consumers.

"It may affect the sales of vehicles in the short-term, but the elimination of price distortion will help the industry and economy in the long-run," Siam said. According to oil ministry sources, the price-hike of diesel is being considered as the government scrambles to find ways to meet an unprecedented Rs 160,000-crore deficit expected this fiscal on selling diesel, cooking gas (LPG) and kerosene below production costs.

Diesel prices may be hiked by Rs 10 per litre over a 10- month period and kerosene rates may be increased by same quantum over the next two years if a proposal being mulled by the oil ministry is accepted.

The price of diesel, which currently costs Rs 47.15 per litre in Delhi, were last revised on September 14 when it was hiked by a steep Rs 5.63 per litre. Kerosene rates have not changed since June 2011 and at present it costs Rs 14.79 per litre in Delhi.