Will the government hike diesel prices?

The government announced a steep 7.5 percent hike in petrol prices late last evening in a bid to help improve finances of state-owned oil companies, which have been reporting losses for three straight quarters now. The movediesel prices is now inevitable, and only the timing is uncertain.

In an interview with ET Now, R.K. Singh, CMD of state run BPCL, said the price hike will take care of petrol underrecoveries but that the subsidies on diesel, kerosene and LPG

"We expect the government to take a call and raise the price of all three items, i.e. diesel, LPG and kerosene, because the underrecovery on diesel today is Rs 13.64 and that on LPG is about Rs 480 per cylinder. I have been saying right from the beginning that this kind of subsidy is just not sustainable and I do not think the government will continue to bear such a burden. So it is inevitable. How much and when are the issues and those have to be addressed by the government," Singh said.

The gap between the petrol and diesel, about Rs 30 per litre, is sizeable and needs to be adjusted, Singh added. " The gap will worsen the situation and more and more cars will get converted into diesel and more and more people will resort to buying diesel. People who use fuel oil will switch to diesel because fuel oil is costlier. So this anomaly needs to be corrected because it is artificially raising demand for diesel." drew scathing criticism from Opposition and allies alike. Most analysts, however, feel a hike in were unsustainable and a price hike of the three products was inevitable.