CII backs government on fuel price hikeJune 6th, 2008 - 12:53 am ICT by IANS
New Delhi, June 5 (IANS) The Confederation of Indian Industries (CII) Thursday backed the government on the fuel price hike saying the upward revision of prices was unavoidable. “The price hike announced on petrol, diesel and LPG is on expected lines and was unavoidable. The continued rise in global oil prices had necessitated this action from the government,” CII president K.V Kamath said in a release.
The reduction of customs duty and specific excise rate has been welcomed.
“The government had a very difficult task at hand. A situation of global slowdown, moderating growth in some sectors of the economy, stress on the fiscal deficit and high inflation in the domestic economy presented the government with a tough balancing act,” he said.
“We hope that the growth momentum would not be impacted too hard by the oil situation,” he added.
Prior to this hike, fuel prices were last raised in India in February 2008 - when oil prices hovered around $100 a barrel. The Indian oil basket now costs around $125 a barrel.
It has been estimated that a 10 percent sustained rise, if passed through, can add as much as 1.3 percent to inflation. The impact of expanding subsidies could contribute an additional 2.5 percent to the fiscal deficit.
The CII has suggested for energy efficiency and conservation measures.
According to Kamath, it is a necessity to have a well-organised public transport system in both urban and rural areas. Energy saving mass transit systems like metro-rail, mono-rail, high-capacity buses, and smaller public vehicles need to be urgently promoted and usage of alternative energy sources expanded, he said.
With over 70 percent of India’s oil demand being met from imports, it was imperative that the country has an oil conservation target, he said. India should target to reduce oil imports by 10 percent by 2010, the CII chief added.