India’s growth intact but no escaping fuel price hike: PM (Lead)

June 2nd, 2008 - 2:43 pm ICT by admin  

A file-photo of Manmohan Singh

New Delhi, June 2 (IANS) Calling for a wider political consensus on “rational economic policies”, Prime Minister Manmohan Singh Monday said there was no way out of hiking prices of petroleum fuels to bail out state-run firms that were bleeding due to high global crude prices. “We cannot allow the subsidy bill to rise any further,” the prime minister told the annual summit of leading industry lobby, the Associated Chambers of Commerce and Industry (Assocham).

“Nor do we have the margin to fully insulate the consumer from the impact of world commodity price and oil price inflation,” he said, adding: “Up to a point we can insulate poor sections of our society and we have done that”.

State-run fuel marketing companies like Indian Oil Corp and Bharat Petroleum have threatened that their collective losses on account of selling fuels below cost could balloon to Rs.200 billion ($5 billion) by the end of this fiscal.

Seemingly upset over political pressures against hiking fuel prices, with some Left allies even threatening a nation-wide agitation, the prime minister also said there has to be some rationale in wider economic matters.

“In the case of other national resources, especially water, we have been altogether imprudent. This situation cannot continue forever. We need wider political consensus to adopt more rational economic policies,” he said.

The prime minister said his government had not revised the prices of kerosene in the last four years and had only raised prices of cooking fuels marginally. Even petrol prices do not fully reflect world trends, he said.

Prices of transport fuels were last increased in February after 20 months.

Manmohan Singh also spoke on the paradox of addressing the twin issue of rising prices and economic growth, especially after the significant dip in industrial production in March.

“I am confident of maintaining 8-9 percent growth,” he said, while adding: “Our government is focussed on reversing the recent surge in the headline inflation rate”.

The prime minister’s remarks came against the backdrop of a revision in India’s growth rate to 9 percent for 2007-08, from 8.7 percent earlier and its annual rate of inflation hitting 8.1 percent for the week ended May 17.

He said the four-year-old United Progressive Alliance (UPA) government was focussed on taming inflationary expectations without hurting the growth process while insulating the weaker sections of the society against rising prices.

“I am confident that the mix of policies we have adopted will yield results but the full impact of our normal monsoon has to be felt.”

The issue of fuel price hike had came up for discussion at the Congress Working Committee (CWC) Saturday, and has been an issue with all political parties such as the Left that support the ruling coalition from outside.

Communist Party of India (CPI) general secretary A.B. Bardhan Sunday announced a nation-wide agitation from June 6 against any hike in fuel prices. “A hike in fuel prices will further shoot up inflation,” he told reporters Sunday.

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