The Planning Commission and country?s bureaucrats on Monday came out in strong support to the introduction of a market-determined pricing mechanism for petrol and diesel and a hike in the prices of cooking gas and natural gas, even as the BJP-led NDA and Left parties went ahead with a nationwide strike to protest the hike in fuel prices.
?It is completely illogical to oppose the fuel price hike unless it is your view that you should drive the country into economic policies which do not make any sense,? Planning Commission deputy chairman Montek Singh Ahluwalia said.
On June 25, the government raised petrol, diesel, kerosene and cooking gas prices in an attempt to narrow the huge fiscal deficit. The hike in fuel prices is expected to push up the headline inflation by more than one percentage point in July itself.
Finance secretary Ashok Chawla said the headline inflation will come down to comfortable levels soon, even after the recent hike in fuel prices. ?Food inflation is going down and it will take some time before it comes down to a level that is acceptable to the government and to the people,? Chawla added.
Country?s new chief statistician TCA Anant also came out in support of the fuel price hike as high fiscal deficit on account of burgeoning fuel subsidies would have caused a generalised inflation in the economy. ?When you boot the entire fuel subsidies what you are doing is converting uncertainty in a single commodity?s price into a generalised uncertainty over your price level,? Anat said.
The union government will still have to boot a subsidy Bill of Rs 50,000 crore this fiscal after the fuel prices were hiked last week. ?Even with the price hike, both LPG and kerosene are heavily subsidised. They are still cheaper in India than in Sri Lanka, Bangladesh and Nepal. The notion that prices have been raised unusually and unfairly is not correct,? Ahluwalia said while defending the stance of the government.