C Rangarajan, chairman, Prime Minister’s Economic Advisory Council (PMEAC) said that there is an urgent need for the government to further decontrol of oil pricing to contain subsidy burden and to keep fiscal deficit at 4.6 % of GDP this fiscal.
?I think the need to take corrective action with regard to petroleum prices has become urgent.The government will have to urgently take a decision on freeing diesel prices contain the fiscal deficit at 4.6 % of GDP during the year for a variety of reasons,? Rangarajan said at the 26th Skoch Summit.
On the likely timing of deregulation of diesel prices, Rangarajan said, “I think soon it will be done.? Rangarajan further said that it was necessary to current level of high inflation. ?High growth doesn’t warrant a higher level of inflation. We must use all our policy instruments to bring down the current inflation and re-anchor the inflationary expectations to the five to five per cent comfort zone,? he said.
On the future measures by the Reserve Bank of India to check inflation he said, it should depend upon the level of inflation. According to Rangarajan the economic growth is now estimated to at 8.5% in 2010-11.
?A frequently asked question is wheether India has the potential to grow at 9% in sustained way. India’s savings rate has crossed 34% of GDP. The investment rate has exceed 36% of GDP Even with an incremental capital-output ratio of 4, this should enable the Indian economyto grow at 9%,? he explained.