NEW DELHI: The Prime Minister's Economic Advisory Council has warned against efforts to politicise the hike in petroleum product prices and stressed that there should be no roll-back.

Council Chairman C. Rangarajan said here on Thursday that the overall inflationary impact of the hike would be less than one per cent.

"The issue of prices of petroleum products should not be politicised. Economic considerations should be the guiding factor," he told reporters after a meeting of the Council with Prime Minister Manmohan Singh.

Even at this level of retail prices, there was a large element of subsidisation in the oil sector including the Rs. 28,000 crore of bonds proposed to be issued shortly.

Mr. Rangarajan said the Council felt the prospects of achieving seven to eight per cent growth in the current fiscal were bright given the strong fundamentals of the economy.

In case the farm sector output grows by four per cent, there is even the prospect of the economy growing by over eight per cent. He said the need for higher productivity in the agriculture sector was highlighted by the Council.

Pension regulator

He said the Council urged for pushing forward economic reforms especially pending legislation to create a pension regulator and bring in a competition law.

Giving details of the issues discussed with the Prime Minister, he said the areas of focus were the current economic situation, growth prospects for the current fiscal, the price situation and agriculture.

Regarding the slide in the stock markets, he said the Prime Minister expressed concern over the situation and sought to know the factors for the continued bearish trends.

The Council's take was that the fall in the sensex was largely due to the impact of global development along with domestic issues such as the hike in fuel prices.

He felt, however, that the stock market was now reaching the bottom. He noted that the mutual funds, which were earlier buying in the market, had also come under selling pressure. But he maintained that prior to the fuel price hike, global factors were exerting pressure on the stock markets.

Mr. Rangarajan pointed out that earlier foreign institutional investors (FIIs) were selling and mutual funds were buying. But the mutual funds had now come under selling pressure as retail investors have panicked, he said.

The Prime Minister was also keen that the agriculture sector picks up, he said, while seeking to identify constraints in this sector.

These included the problems of marginal and sub-marginal farmers, low productivity and the need for improving the institutional systems supplying credit to the farm sector, he said.

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