The Kirit Parikh Committee, set up in May to advise the government on fuel pricing, also suggested capping the subsidy on diesel sales at 6 rupees a litre, Oil Minister S Veerappa Moily told a press conference.

The recommendations of the committee are not binding and need cabinet approval to be implemented. With state elections looming from November and a general election due by May 2014, the government may find it difficult to raise domestic fuel prices sharply.

India, the world's fourth-largest oil importer, needs to rein in subsidy spending to help stabilize its finances and support the rupee, which hit a record low earlier this year.

The diesel price hike could cut the government's fuel subsidy bill by as much as 160 billion rupees from November 1 to the end of the current fiscal year on March 31, 2014, a news agency calculations show. Diesel accounts for over 40 percent of refined fuel use in the country.

(Agencies)

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