New Delhi: After announcing a hike in railway fares on Wednesday, the government is set to raise fuel prices as early as this week or next week.

Planning Commission Deputy Chairperson Montek Singh Ahluwalia on Thursday said that the decision to increase fuel prices will be taken in a week or two. According to him, a hike of Rs 4.50 per litre in diesel prices and Rs 100 per LPG cylinder is bound to happen.

He added that the government was looking to achieve 8 percent growth rate and willing to take tough decisions.

According to sources, the Oil Ministry’s proposal to raise diesel prices and increase the number of subsidised LPG cylinders has got the approval of both Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi.

Recently, Manmohan Singh had warned that the government must raise diesel, kerosene and cooking gas prices in a phased manner as India's fuel prices are well below international prices. "Energy remains under priced in our country, with coal, petroleum products and natural gas prices well below international prices. To meet our target of rapid, inclusive and sustainable growth we must undertake a phased rationalisation of energy prices to bring them in line with world prices," he had said.

Notably, on Wednesday, Railway Minister Pawan Kumar Bansal announced a hike in railway fares, the first in the last 10 years. The new fares will be effective from January 21, 2013 midnight.

(JPN/Agencies)

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