India's subsidy bill for the oil sector in year to March, 2004, will rise 29.5 per cent to Rs 8,116 crore (Rs 81.16 billion) from the previous fiscal year, Budget papers showed on Friday.

The bill includes the cost of selling cheap cooking gas and kerosene to households, a freight subsidy for selling refined products in remote areas and compensation for some local taxes levied on refiners.

The subsidy on cooking gas and kerosene will rise 40 per cent to Rs 6.300 crore (Rs 63 billion). The cost of the various subsidies are rising because of a steep increase in global crude prices.

Crude prices touched 12-year highs on Thursday with the looming prospect of war in Iraq and a thin supply cushion of winter heating fuel in the United States, where parts of the country are seeing abnormally low temperatures.

Reuters