Ahead of the elections in five states, the government is likely to clear a proposal to levy a 10 paise per litre cess on petrol and diesel to create a social security fund for 37 crore (370 million) workers in the unorgansied sector.

The proposal is expected to come up before the Cabinet meeting on Thursday, official sources said.

Sources said that a cess of 10 paise per litre on petrol and diesel is expected to garner Rs 520 crore (Rs 5.20 billion) for the fund.

The social security scheme for the unorgansied sector is likely to cost the exchequer Rs 1,000 crore (Rs 10 billion) in 10 years.

The 10 paise cess, if imposed, would be over and above the Rs 6 per litre of cess currently imposed on petrol as well as the Rs 1.50 per litre on both petrol and diesel. The Rs 1.50 per litre cess is levied for mopping up resources for highway projects.

A legislation for this purpose is likely to be considered by the Cabinet, which, if cleared, is expected to be introduced in the Winter Session of Parliament.

The Cabinet is also expected to take up the issue of tariff concession under the third round of negotiations of Bangkok Agreement, amendment of the NDPS Rules 1985 and proposal for exemption of the power sector from purchase preference for projects and services of Public sector units.