More investment requires fuel price adjustment: Montek

 Planning Commission Deputy Chairman Montek Singh Ahluwalia on Sunday said fuel price adjustment has to be made “at some point of time” to get investments back.

“At some point some fuel price adjustment has to be made. We need to get investment back,” Ahluwalia told reporters when asked about the withdrawal of subsidy on the diesel.

His comments follow Chief Economic Advisor Kaushik Basu pitching for decontrol of diesel prices partially and “intelligently”. “Partial decontrol has to be done very intelligently…
So what I am hopeful for is that we will do our professional partial decontrol which is going to shelter the consumers partly but also allow a float to take place from now on,” Basu had said.

However, he had said that the move would take some time. In India, oil marketing companies are free to determine petrol prices, but diesel, LPG and kerosene are sold at discounted prices. Trade body CII has asked the government to move swiftly to rationalise the prices of these petroleum products.

The impact of diesel price regulation is evident in multiple sectors of the economy and it is obvious that diesel subsidy is doing more harm than good in its various ramifications. India imports almost 80 percent of its oil requirements.

“Today, for every litre of imported diesel, government pays a subsidy of Rs 15. A complex system of duties and cess, which vary from state to state, distorts the entire diesel pricing mechanism,” CII had said.

On the apprehension that raising diesel price will push up inflation, it had said indirectly, diesel price is already contributing to inflationary pressure through a ballooning fiscal deficit.

(curtsey : first post)

Rupesh Yatesh Dalal
Head Research Department

Website :
Facebook :
Twitter : @marketcallsnet
Yahoo Messenger :
Email :


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: