New Delhi, February 1
Petroleum Minister Veerappa Moily on Friday Diesel prices will be hiked by 40-50 paise per litre every month till losses on the nation’s most used fuel are completely wiped out.

"Until further orders, oil marketing companies can increase it (diesel price) by 40-50 paise (per litre) every month," he said. The government had on January 17 initiated the move towards deregulating diesel prices from government control and gave powers to state-owned oil firms to raise prices in small measures every month till all of their losses are wiped out.

This shifts the onus of hiking prices to oil companies as was done with petrol earlier. However, given that oil companies are government controlled, there is a lot of government say in going through with these decisions.

Diesel is currently sold at a loss of over Rs 10.80 per litre and assuming this number, diesel prices will keep going up for almost 22 months.

On January 17, oil firms hiked diesel price by 45 paise. After including local VAT, the increase in Delhi came to 50 paisa. The diesel now costs Rs 47.65 a litre in the capital. When this decision was taken, it was taken to understand that this will now be a monthly fixture but it was not spelled out in as many words.

Moily said the decision to raise diesel prices in small doses every month will stand "until further orders". He, however, did not say when the oil firms will effect the second price increase. Many analysts have said that given that this year will see many Assembly elections followed by the general elections next year, it will be difficult for the government to keep doing this regularly especially in the second half of the year.