The panel comprises of leaders from the Congress's allies in the UPA government. Officials said although the issue of raising prices were not on the agenda of the committee, the Cabinet Committee on Political Affairs would take up the issue at its meeting scheduled to start at 6.30 pm.
The Centre subsidises prices of fuel products like diesel, cooking gas and kerosene but the popular policy has seriously affected public finances. The strain has put India's investment grade credit at risk.
The full cabinet is also scheduled to meet on Friday where other means of reviving the economy would be taken up. The cabinet will discuss the proposal to allow foreign airlines to invest in the country's domestic carriers, it is learnt.
The government said price hike for fuel products is essential to curb fiscal deficit, which is essential to revive the country's economy but at the same time, it knows a hike will be a politically risky move, particularly ahead of the crucial assembly polls starting towards the end of this year. The price hike will also add to inflation as other costs will increase, a report said.
The petroleum ministry has recommended to increase diesel price by Rs 5 per litre and Rs 50 per cylinder of cooking gas, a report published by ABP Ananda news channel said. Although a section of the UPA allies has opposed the proposal, the government is expected to convince them on the matter.
The channel report also said that the committee was supposed to meet on Tuesday but it was postponed later. Petroleum Minister S Jaipal Reddy said the hike in petro-product prices is inevitable, given the rise in crude prices and fall of the rupee vis-a-vis dollar. Price of diesel and gas prices has not increased after June last year.