Government has decided to cap the subsidy payout on kerosene at Rs 12 per litre. Kerosene is sold through public distribution system at Rs 14.96 per litre against the actual cost of Rs 33.47. The difference of Rs 18.51 per litre is termed as under-recovery or revenue loss. A senior official said the formula for meeting this under-recovery has now been finalised. He said the Finance Ministry will pay Rs 12 per litre in cash to state-owned fuel retailers from the Budget and any unbridged gap between the retail selling price and the cost of production will be borne by upstream companies. For domestic cooking gas LPG, the government has decided to fully bear the under-recovery, he said.