The government is not yet prepared to deregulate diesel prices in the wake of high inflation and rising global crude prices, chief economic advisor in the finance ministry Kaushik Basu said on Thursday.
?I am not of the view that diesel price deregulation is inevitable and that is the position taken by petroleum ministry right now. Given the inflationary situation right now, we don?t want to do that,? Base said on the sidelines of a CII seminar on Thursday.
However, Basu said if international crude oil prices continue to remain high for a longer time, the government would have to make a tough choice between hiking diesel and cooking fuel prices and shelling out more on oil subsidies to companies.
?I can?t give you an assurance that it will happen nor can I say it won?t happen. It depends on how long the $115-116 a barrel lasts. There can come a point where we are forced to confront the question whether we take it on fiscal or do we pass it on consumers,? Basu said.
In the Budget 2011-12, the finance ministry provided for R23,640 crore in oil subsidy, lower than R38,386 crore of current fiscal. Global crude oil prices are at the highest level since 2008, touching $116 per barrel.
Basu further said the government was not comfortable with current level of food inflation, which fell to 10.39% for the week ended February 19 from over 11.49% in the previous week.