‘Political consensus needed for more rational economic policies’
We have marginally raised LPG, diesel prices. Even petrol rates do not fully reflect world trends. This cannot continue forever. — Manmohan Singh
New Delhi: Preparing the ground for a possible hike in petro-product prices, the Prime Minister, Dr Manmohan Singh, on Monday categorically said that the Government was in no position to fully insulate the consumer from the impact of global oil price surge.
“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. Up to a point we can and we have indeed insulated poorer sections of our society,” Mr Singh said at the annual general meeting of Assocham here on Monday.
The Prime Minister pointed out that the UPA Government had 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,” Mr Singh said, even as senior Ministers and officials continued discussions on a package to bail out State-owned oil companies reeling under the impact of exceptionally high international crude prices.
For the past one week, there have been a series of consultations among various wings of the Government to hammer out a package that would look after the interests of the oil companies as well as the consumers.
Options
Basically, the options before the Government now include a possible duty re-adjustment on petroleum products; issuance of another tranche of oil bonds; higher subsidy compensation by upstream oil companies and some amount of increase in the retail prices of auto fuels.
Political parties including the Left parties are opposed to any fuel price hike. Many of them have called for duty cuts rather than looking at price hikes.
The Prime Minister also noted that the unrelenting rise in crude oil prices threatens to disrupt the development process in a large number of oil-importing developing countries.
“It can have adverse consequences for the global war against poverty. We, therefore, need a new global compact between oil producers and the developing world. We need global leadership. We need greater global compassion,” he said.
Positive on growth
The Prime Minister said that the country needed to follow more prudent fiscal policies to ensure the stability and sustainability of the growth process. He, however, expressed confidence that the Indian economy would continue to grow at 8 to 9 per cent rates and that India would emerge as one of the growth engines for the world economy as a whole.
“While the Government will remain engaged in stabilising the macro-economic situation, it will also have to pay due attention to sustaining the long-term growth of our economy.
“We have to learn to husband our fiscal resources. We have to manage our public finances more effectively.
“I do not wish to see a return to the era of blind controls of the past. At the same time, we have to have the fiscal means to protect the poor from the adverse impact of inflation,” Dr Singh said.
