RBI asks govt to tread a cautious path on oil prices

Pune, Sept 29 | Updated: Sep 30 2006, 05:32am hrs
Rakesh Mohan, deputy governor, Reserve Bank of India (RBI), on Friday advised the government to be cautious before taking any decision on domestic oil prices in the wake of falling crude oil prices.

Global oil prices are volatile. They went up suddenly, come down somewhat suddenly. By no stretch of imagination are oil prices low, even at these levels. We have to watch the market carefully. We have to be cautious before strong interpretations, Mohan said.

Crude oil prices have a history of volatility. After the first oil price rise in 1973-74, oil prices came down somewhat in 1979-80 and went up again in 1990. They have been up again over the last four years. Therefore, it is difficult to make any statement. We do not know whether the current crude oil prices are permanent or not, Mohan said.

Mohan said there has been agricultural stagnation between some of the foodgrain and pulses for sometime. As we have been saying and the government itself has been saying, more attention has to be given on this issue.

The monsoon this year has been somewhat better than the predictions and we hope that would have an appropriate effect on agriculture production for the year, he said.