Ramachandran said the oil pool deficit currently estimated at Rs 5,200 crore would have gone up to Rs 10,000 crore by the end of the year had there been no increase in diesel prices.

Despite the latest price hike, oil pool account would still have a deficit of Rs 3,400 crore at the end of the year, presuming that international oil prices remained at September levels, he said.

The subsidy burden on LPG has increased to Rs 157 a cylinder compared to the retail price of Rs 146 a cylinder. The subsidy on kerosene is Rs 5.75 a litre at a retail price of roughly Rs 2.5 a litre. The total subsidy burden comes to Rs 12,000 crore.

Obviously a further increase in petroleum product prices is imminent but Ramachandran said that the decision would rest with the Union government.

With Tuesday's hike, the ex-storage point price of diesel has gone up to Rs 9634.60 per kiloletre from Rs 6,882.15 per kiloletre. The retail price of diesel would vary from metro to metro depending on taxes and other levies. In New Delhi, where the sales tax component is only 11 per cent, diesel prices have increased by Rs 3.56 a litre to Rs 13.91 a litre. In Mumbai where the ST component is 30 per cent, diesel prices have gone up to 16.54 a litre from Rs 12.23 a litre which is an increase of Rs 4.31.

In Calcutta, diesel would be higher by Rs 3.68 at Rs 14.20 and Chennai diesel would cost Rs 3.97 more at Rs 15.24 per litre.

Though the government had linked diesel prices to import parity prices in 1997, it was untouched since April fearing the political fallout of such a move ahead of the general election.

The international price of diesel in September was $174.52 a tonne fob compared to the March average fob price of $97.38 a tonne. The October price of diesel announced on Tuesday is based on the international price prevailing in September. The diesel price-hike of April was based on the March average.