Consumers can't be insulated from oil spike: PM

Mon, Jun 2 01:22 PM

With political parties including the Left opposing hike in fuel prices, Prime Minister Manmohan Singh on Monday warned government is not in a position to fully insulate the consumers from the impact of rising oil 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 and oil price inflation," Prime Minister said, addressing the Assocham's annual meeting in New Delhi.

Calling for a wider political consensus, Singh said the government could insulate poor people "up to a point" and economic pricing of oil was essential to sustain growth.

However, he expressed confidence that the Indian economy would continue to grow at 8 per cent and above despite global slowdown.

India has maintained the economic growth of 9 per cent and above for the last three years.

While the government would remain focused on reversing the upsurge in inflation, Prime Minister said, "We have to learn to husband our fiscal resources prudently."

Seeking industry support for taming the price rise, Singh said, "I do not wish to see a return to era of blind controls...At the same time, we have to have the fiscal means to protect the poor from adverse impact of inflation."

Despite the crude oil prices ruling in the range of 127 dollars a barrel and causing huge losses to the state-owned oil marketing firms, the government has not been able to pass on the burden due to lack of political consensus.

There are differences within the government also as to how to resolve the crisis. Finance Ministry is opposed to duty cuts sought by the Petroleum Ministry as also the Left parties.

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