Government's decision is purely based on the fierce opposition it has received from all quarters after it had announced hike in diesel prices and put a cap on LPG cylinder recently.
The diesel price has been increased by Rs 5 a litre and each household will get only six domestic LPG (14.2 Kg) cylinders per annum at a subsidised rate.
Along with opposition parties, a section of the Congress and its allies - the Trinamool Congress, NCP and DMK have been demanding a rollback of the cap on LPG cylinders.
Sources say that the government is expected to reach out to its ally Trinamool Congress and discuss a compromise over the cap in subsidised LPG cylinders. Sources add that Prime Minister Manmohan Singh is likely to call Mamata Banerjee on Monday, Sept 17 and arrive at a compromise over cap on subsidised LPG cylinders.
The latest decision of government on fuel price hike has come under immense criticism. The BJP-led NDA has announced a nation-wide strike over the price hike and LPG cap on Sept 20. Left parties have also announced a 12-hour all-India general strike on the same day.
However, Prime Minister Manmohan Singh maintains that it takes "courage and some risks" to break the policy logjam in the country.
Sources say Finance Minister P Chidambaram and Petroleum Minister Jaipal Reddy were opposed to the cut in subsidy. Sources also say that the government is not keen on raising the prices of kerosene and petrol for now.