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Tuesday, Jun 03, 2008
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“We cannot fully insulate consumer”

Special Correspondent

Oil price hike inevitable: Manmohan

India will have to follow more prudent fiscal policies
Growth will continue at current rate

NEW DELHI: In search of a “wider” consensus among political parties — including the UPA coalition partners and the Left parties — Prime Minister Manmohan Singh on Monday indicated that an upward revision of fuel prices was inevitable. For, the government was not in a position to fully insulate the consumer from the impact of the global surge in crude oil and commodity prices.

“We cannot allow the subsidy bill to rise any further. Nor do we have the margin to fully insulate the consumer from the impact of world commodity price and world oil price inflation,” Dr Singh said in his inaugural address at Assocham’s annual meeting here.

Dr. Singh made it clear that the country “will have to follow more prudent fiscal policies if the stability and sustainability of the growth process is to be ensured. Although the government could insulate the poor people “up to a point,” economic pricing of oil was essential to sustain growth, he said.

“Upto a point we can and we have indeed insulated the poorer sections of our society. Our government has not raised the price of kerosene in the past four years. We have very marginally raised LPG and diesel prices. Even petrol prices do not fully reflect world trends. In the case of other natural resources, especially water, we have been altogether imprudent. This situation cannot continue forever. We need therefore wider political consensus to adopt more rational economic policies,” Dr. Singh said.

However, despite the global slowdown in the wake of soaring oil prices, the Prime Minister exuded confidence in the Indian economy continuing to grow at 8 per cent, especially when the country maintained an economic growth of 9 per cent and above for the last three years. The government, he said, was focussed on reversing the upsurge in inflation. “We have to learn to husband our fiscal resources prudently,” he said.

Asking industry to extend a helping hand in taming the price rise, he said: “I do not wish to see a return to the era of blind controls ... At the same time, we have to have the fiscal means to protect the poor from the adverse impact of inflation.”

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