The Union Cabinet is likely to meet later this week to take a final decision on the quantum of hike in auto fuel, highly placed sources in the Petroleum Ministry told Deccan Herald. The Petroleum Ministry is understood to be in favour of “marginal” hike in retail prices of petrol and diesel accompanied by reduction in duties on petroleum products, sources said.

However, the hike is not finding acceptance by some of the key UPA allies like the NCP and RJD, political sources said. Left Parties, who are supporting the Congress-led UPA government from outside, are opposed to any hike. With eight major states of the country heading for elections to their respective state assemblies later this year, none of the political parties is willing to take any political risk by supporting any proposal for oil price hike. The Congress party has maintaining the stand that though the impact of surging global oil price on the economy is worrisome efforts should be to minimise burden on the consumers.

The Group of Ministers (GOM) on fuel prices after holding two rounds of meeting to firm up option to deal with the crisis, have decided to leave the matter to the Union Cabinet. The OMCs are projected to incur an under-recovery of Rs 71,808 crore on fuel sale in the financial year, 2007-08 if prices and duties are not revised.